Luận văn a study on satisfaction and brand loyalty towards durables

preference on brand loyalty w.r.t customer satisfaction towards air conditioner 192 and brand preference on brand loyalty w.r.t washing machine 195 4..3 Path Analysis of Factors determi

A STUDY ON SATISFACTION AND BRAND LOYALTY

TOWARDS DURABLES

A THESIS

Submitted by

V SURESH (Reg No 8389)

BUSINESS ADMINISTRATION

in partial fulfillment of the requirements for the award of degree of

DOCTOR OF PHILOSOPHY

MANONMANIAM SUNDARANAR UNIVERSITY

TIRUNELVELI–627012

JANUARY 2019

MANONMANIAM SUNDARANAR UNIVERSITY

TIRUNELVELI–627012

CERTIFICATE

The research work embodied in the present Thesis entitled “A STUDY ON

SATISFACTION AND BRAND LOYALTY TOWARDS DURABLES” has been carried out

in the Department of Management Studies, Manonmaniam Sundaranar University, Tirunelveli

The work reported herein is original and does not form part of any other thesis or dissertation on

the basis of which a degree or award was conferred on an earlier occasion or to any other scholar

I understand the University’s policy on plagiarism and declare that the thesis and

publications are my own work, except where specifically acknowledged and has not been copied

from other sources or been previously submitted for award or assessment

V SURESH

(Reg No 8389)

Research Scholar Dr C KATHIRAVAN, M.B.A., Ph.D.,

Assistant Professor, Department of Business Administration, Annamalai University

Chidambaram 608 002

ACKNOWLEDGEMENT

Completing this doctoral dissertation, amid household chores, financial

commitments and tiring work life was a daunting task for me Without the grace of God

and the support from the near and dears, completing this dissertation would be a mirage Being a fortunate person, I would like to express my sincere gratitude to all those beloved people who are in diverse ways helped me to earn the doctoral degree

I would like to express my eternal gratitude to my parents Mr.N.M.Victor and Mrs Late S.Jayarani for their everlasting love and support They bore me, raised me,

supported me, and loved me I dedicate this dissertation to my PARENTS

I would like to express my deep sense of gratitude and greatest appreciation to

my research guide, Dr.C.Kathiravan, Assistant Professor, Department of Business

Administration, Annamalai University, Chidambaram for his valuable comments and constructive suggestions throughout the research I am grateful for the time and efforts

he devoted for me Grateful thanks are due to him

I wish to thank Manonmaniam Sundaranar University for allowing me to

register for Doctorate program in their esteemed institution I also thank the administrative staff members of the Research Section of the University for their Administrative Help

I am extremely grateful to Prof S.Venu Thyagarajan, Dean i/c of SRM

Institute of Science and Technology for his unceasing encouragement and extensive help

to complete this doctoral study I thank Prof.S.Naresh Head, Associate Professor,

Prof.C.VijayVishnuKumar,Prof.J.Alagiriswamy,AssistantProfessors,SRMInstitute of

Science and Technology for their regular support I am extremely thankful to

Prof.P.Suresh, Prof.E.Nixon Amirtharaj and Prof J.Sadeesh for the wonderful ideas

and knowledge that they always share with me

Data collection was a crucial part of this journey I thank all the Respondents

who spent some quality time with me to participate in the survey I also thank friends, relatives and colleagues who helped me in collecting the data Especially, I thank to other college professors for helping me in data collection

I express my sincere gratitude to my colleagues of Annamalai University for

their advice, kind thoughts, and suggestions I am grateful to my friends in SRM Institute of Science and Technology for constant support and caring they provided I am sincerely thankful to Madras University, for providing me the SPSS literature required for the study

I am thankful to my brothers and sisters and their family for their constant encouragement I thank my beloved wife Mrs.T.Sagaya Kavitha, for providing a

loving environment for me to complete the study Without the kind help of my Daughter

S.Immaculate Perdita and my son S.Bambino Thanaston Fernando it would not be a

complete one I thank my brother-in-law Mr.T.Francis Loyola Fernando and my sister Mrs.A.Arokia Sujitha for helping me in project work I thank my Mother-in-

law’s contribution for my successful completion of this course

Finally, my thanks go to all the people who have supported me to complete the research work directly or indirectly

V.SURESH

CHAPTER TWO: REVIEW OF LITERATURE

CHAPTER THREE: RESEARCH METHODOLOGY

Chapter

No TABLE OF CONTENTS

Page

No

CHAPTER FOUR : DATA ANALYSIS AND INTERPRETATION

CHAPTER FIVE: SUMMARYOF FINDINGS, SUGGESTIONS

and brand preference on satisfaction and brand loyalty

213

loyalty towards durables

215

LIST OF TABLES Table

Page

No

based on type of washing machine

97

washing machine brands

100

using years of air conditioner

103

Washing machine offer

106

based on mode of payment

109

star rating

112

type of air conditioner

115

brand of air conditioner

118

using years of air conditioner

121

air conditioner offer

124

mode of payment

127

Table

Page

No

based on air conditioner star rating

130

type of refrigerator brands

133

brand of refrigerator

136

on using years of refrigerator

139

refrigerator offer

142

based on mode of payment

145

on refrigerator star rating

148

type of washing machine

151

brand of washing machine

153

using years of washing machine

156

on washing machine offer

159

mode of payment

161

washing machine star rating

162

type of air conditioner

164

Table

Page

No

on brands of air conditioner

166

using years of air conditioner

168

air conditioner offer

170

mode of payment

172

air conditioner star rating

using years of refrigerator brands

on refrigerator star rating

184

on satisfaction with air conditioner

186

brand loyalty with respect to air conditioner

187

satisfaction w.r.t washing machine

188

Table

Page

No

preference on brand loyalty w.r.t washing machine

189

satisfaction w.r.t refrigerator

190

brand loyalty w.r.t refrigerator

preference on brand loyalty w.r.t customer satisfaction towards air

conditioner

192

and brand preference on brand loyalty w.r.t washing machine

195

4 3 Path Analysis of Factors determining towards purchase of durables and brand

preference on brand loyalty w.r.t customer satisfaction towards refrigerator

199

LIST OF ABBREVIATIONS

ACSI : The American Customer Satisfaction Index

AGFI : Adjusted Goodness of fit

AMOS : Analysis of Moment Structures

ANOVA : Analysis of Variance

FICCI : Federation of Indian Chambers of Commerce and Industry

FMCG : Fast Moving Client Goods

MANOVA : Multivariate analysis of variance

RMSEA : Root mean square error of approximation

SCSB : Swedish Customer Satisfaction Barometer

SEM : Structural Equation Modeling

SPSS : Statistical Package for Social Sciences

CHAPTER I INTRODUCTION

1.1 Introduction

Opening lines of this first section incorporates almost all the relevant explanations about the operational definitions which are to be well defined Satisfaction is the affective side of the human behavior which is integrated with the internal feelings of the consumer towards a product/service Satisfaction prevails only when the expectations of the customer are satisfied to a satisfactory level even though not in full Introducing, developing and maintaining brand qualities with assurances to the existing consumers is critical for the survival of any company in a competitive environment (Heskett, 2002; McMullan & Gilmore,2008; Mellens, et al 1996).After satisfaction brand loyalty buy out as a gratitude by the customer towards the producer or the service providers Brand loyalty programs based on underlying emotional attitude can increase business and its performance (Keiningham, et al 2008) Reichheld and Sasser (1990) had found out that 5 percent increase in customer retention had resulted in a 25-125 percent increase in profits This increase

in profit was due to reduction of sales and marketing costs, increased price premiums, referrals, and revenue growth (Heskett, 2002; McMullan & Gilmore,

2003, 2008; Reichheld, 2003; Rowley, 2005) In short, brand loyalty is an important strategy to develop a sustainable competitive advantage for any business (Dick & Basu, 1994; Gounaris & Stathakopoulos, 2004; Mellens, et al 1996), Han, et al 2008; Kandampully & Hu, 2007) Despite the notable impact that brand loyalty has

on business performance, relatively little theoretical and empirical research has examined service loyalty (Gremler & Brown, 1998; Jones & Taylor, 2007; Oliver,

1999) Service loyalty can be considered as an inseparable segment contributing to the brand loyalty

1.2 Customer Satisfaction

Customer satisfaction is the one which is related to the individual consumer’s perception over expected the performance of the product or service in relation to his or her expectations (Schiffman & Kanuk, 2010; Armstrong & Kotler, 2010) Oliver (2010) opined that the satisfaction is the customer’s fulfillment response It is the personal judgment over a product or service feature, or the product

or service itself, which provides a pleasurable level of consumption-related fulfillment Zeithaml, et al (2009) argued that failure to meet customer needs is assumed to result in dissatisfaction with the product of service Hoyer and McInnis (2001) noticed and stated that satisfaction can be associated with feelings of acceptance, happiness, relief, excitement, and delight

Customer satisfaction has been attempted for a very long time to understand,

to identify and to recognize in the field of marketing thoughts and practices From the past three decades or so customers’ satisfaction was considered as a centralized concept as well as an important goal to reach the target of sales in all business activities (Anderson, Fornell, and Lehmann 1994) There are two different conceptualizations about customer satisfaction; one is transaction-specific satisfaction and the other is cumulative satisfaction Transaction- specific satisfaction provided specific diagnostic information about a particular product or service encounter by the customer (Lam et al 2004) Transaction- specific satisfaction cumulative customer satisfaction is an overall evaluation based on the total purchase and consumption experiences of the consumer with a product or service over a span of time (Anderson, Fornell, and Lehmann 1994); this type of

satisfaction is more fundamental and useful than that of the transaction – specific consumer satisfaction Cumulative customer satisfaction is more comprehensive and efficient in predicting a consumers’ subsequent behavior as well as a firm’s past, present and future performances It is the cumulative customer satisfaction that motivates a firm to invest its time energy in understanding customer satisfaction (Wang and Lo 2002)

Customer satisfaction is generally defined as a feeling or judgment or perception or a state of satisfaction by customers towards specific products or services, after they have used them (Jamal and Naser 2002) Though customer satisfaction is essential for survival of any industry or production firms (Rampersad, 2001); but customers who are retained may not always be satisfied due to stereotypic endeavor and satisfied customers may not or cannot always be retained (Dick and Basu 1994) Hence this creates a challenge for maintaining possibly higher levels of service, awareness of customer expectations and improvements in services and product (Pizam and Ellis 1991) However, satisfied customers are the assets of an organization that promises and ensure a regular cash flow into the business in the near future (Rahman 2004) If customers are satisfied with a particular product or service after its use, they are likely to engage in repeated purchases and try line extensions Customers are also likely to convey others about their favorable and better experiences The consumers engage in positive word-of-mouth advertising whereas dissatisfied consumers are likely to switch over to other brands and engage

in negative word-of-mouth advertising (Naser, Jamal, and Al-Khatib 1999)

Customer satisfaction renders so many benefits for the firm They are like increased loyalty for current suppliers, reduced price elasticities, insulation of current suppliers from competitive efforts, lower costs of future transactions,

reduced failure costs, lower costs of attracting new customers and an enhanced reputation for the firm (Anderson, Fornell, and Lehmann 1994) Moreover, it is also believed that customer satisfaction is comparatively good, even though not the best forms the indicator of firms’ future profits (Chan, et al 2003)

Levesque and Mc Dougall (1996) had found and announced that service problems and bank’s service recovery ability have a major impact on customer satisfaction and intentions to switch to the other banks Mooradian and Oliver (1997) through their study had revealed that satisfaction had led to repeat purchase intentions Naser, Jamal, and Al-Khatib (1999) had indicated that a vast majority of respondents are satisfied with most aspects of the Islamic bank’s products and services Chiou, Droge, and Hanvanich (2002) had revealed that service quality only influences purchase intentions only through satisfaction Mai and Ness (2006) had indicated that customer satisfaction is associated with service and product features of mail order specialty food Suh and Yi (2006) had showed that customer satisfaction has greater effect on brand loyalty and brand attitudes when product involvement is low i.e household goods In contrast, corporate image and attitudes toward the advertisement have had more effect on brand attitudes and attitude has more effect on loyalty when product involvement is high, i.e cosmetics Bontis, Booker, and Serenko (2007) had found out that customer satisfaction enhances reputation in the service environment Molina, Consuegra, and Estaben (2007) had showed that confidence benefits of the benefitted consumers had a direct, positive effect on the satisfaction of customers with their bank Dapkevicius and Melnikas (2009) had revealed that price and quality are important factors for customer satisfaction received through Pepsi, Coke and Wine; whereas Naik, Gantasala, and

Prabhakar (2010) had revealed that services offered by retail units have positive impact and are significant in building customer

Satisfied customers will often repeat the purchase, probably be brand loyal, and convey positive word-of-mouth advertising, and all these will enhance sales Almossawi, 2012) Customer’s satisfaction may also be associated with feelings of ambivalence when there is a mix of positive and negative experiences associated with the product or service (Zeithaml, et al 2009) According to Schneider and Bowen (1999), most customers range from moderately dissatisfied to moderately satisfy and it is most likely that with additional factors, like: better price or more convenient store location the customer will eventually defect

There remained a dire need for the perpetual enhancement Customers’ satisfaction and experience, and even then it is often not enough to retain them because even satisfied customers are not always loyal, and what more defect at a high rate Heskett, et al (2008) opined that the relationship between scores and loyalty depend on whether customers are “very satisfied” or only “satisfied” with the product or service Customers being “very satisfied” are five times more likely to repurchase Satisfaction is a dynamic phenomenon, that may fluctuate over time, and may be influenced by a variety of factors, and these will be further investigated in this research with respect to well-known retailer- ZARA

1.3 Models of customer satisfaction measurement

Organizations analyze the recent trends in customer satisfaction with various customer satisfaction models since the concept is very dynamic involving more changes Different models are based on some theories of customer satisfaction Some of the vital models are like 1) The Servqual model; 2) The Kano model; 3) The American Customer Satisfaction Index (ACSI); 4) The Servperf scale; 5)

Swedish Customer Satisfaction Barometer (SCSB) and 6) The Hotelzot (A modified version of SERVQUAL)

The Servqual model

The SERVQUAL instrument has been widely applied in a variety of service industries Parasuraman, Zeithamal and Berry (1988) built a 22-item instrument called SERVQUAL for measuring consumer perceptions of service quality SERVQUAL addresses many elements of service quality divided into the dimensions namely tangibility, reliability, responsiveness, assurance, and empathy

A number of researchers have applied the SERVQUAL model to measure service quality The most widely accepted conceptualization of the customer satisfaction concept is based on the expectancy disconfirmation theory This theory was postulated by Oliver (1980), who proposed that satisfaction level is the result of the differences between the expectation and the perception of the experiences or performances Satisfaction is the positive disconfirmation which occurs when a product or service is better than expected On the other hand, if a performance was felt as worse than expected results with dissatisfaction this is the negative disconfirmation A relatively easy way to determine what type of services the customer prefers is simply to ask them through the interactions Schall (2003) discusses the issues of question clarity, scaling, validity, survey timing, question order, and sample size “According to the SERVQUAL model, service quality can

be measured by identifying the gaps between customers’ expectations of the service

to be rendered and their perceptions of the actual performance of service SERVQUAL is based on five dimensions of service:

1 Tangibility

Tangibility refers to the physical characteristics which can be felt by the sense organs; summation of these senses leads to satisfaction or dissatisfaction in the mindset of the consumer

4 Assurance

Diverse features that provide confidence in the mindset of the customers such as the firm’s specific service knowledge polite and trustworthy behavior from employees

5 Empathy

The service firm’s readiness to provide each customer with personalized service; it means the transcendental approach of the firm and its related services offered to the consumers

Criticisms related to SERVQUAL

Zeithaml and Bitner (1196) commented that even though SERVQUAL has been considered as a measure of service quality, the instrument had been criticized

on conceptual as well as methodological grounds The main criticism over

SERVQUAL has been focused on the use of ‘expectation’ as a comparison standard;

it is not objective It had been stated that expectation is dynamic in nature that is why it is said to be subjective One of the main problems mentioned in the literatures are about the reliable and valid applicability of the five SERVQUAL dimensions to different service sectors and replication studies done by other investigators failed to support the five-dimensional factor structure as was obtained by Parasuraman, et al

in their development of SERVQUAL”

Kano Model

The Kano model is a theory developed in the decade 1980’s by the Professor Noriaki Kano and his colleagues of Tokyo Rika University The Kano, et al (1996) model of customer satisfaction classified product and service attributes based on how they are perceived by customers and their effect on customer satisfaction The model was based on three types of attributes namely 1) basic or expected attributes, (2) performance or spoken attributes, and (3) surprise and delight attributes The performance or spoken attributes were considered as the expressed expectations of the customer The basic or expected attributes implies the basic attributes without any major significance of worth mentioning The surprise and delight attributes are those, which are beyond the customers’ expectations Kano model measures satisfaction against customer perceptions of attribute and its performance Kano model grades the customer requirements and determines the levels of satisfaction The underlying assumption behind Kano model is that the customer satisfaction is not always proportional to how fully functional the product or service is In this model, Kano (Kano, 1984) distinguishes between three types of basic requirements, which influence customer satisfaction They are:

(1) Must be requirements: Must be requirements are considered as the primary attribute among several attributes If these requirements are not fulfilled, the customers will be extremely dissatisfied On the other hand, if the customer feels that these requirements are served, to their fulfillment will increase his satisfaction;

2) Dimensional Requirement: Dimensional requirements are usually explicitly demanded by the customer the higher the level of fulfillment, the higher the customer’s satisfaction and vice versa

(3) Attractive Requirement – These requirements are the product/service criteria which have the greatest influence on how a satisfied customer will be with a given product The additional attributes, which Kano had mentioned are: Indifferent attributes, Questionable attributes, and Reverse attributes

The American Customer Satisfaction Index (ACSI)

The American Customer Satisfaction Index (ACSI) was launched in 1994, by the University of Michigan’s Ross School of Business The American Customer Satisfaction Index uses customer interviews as input to a multi-equation econometric model The ACSI was based on a model originally implemented in 1989 in Sweden called the ‘Swedish Customer Satisfaction Barometer (SCSB) The ACSI model is a cause-and-effect model with indices for drivers of satisfaction; on the left side, customer expectations, perceived quality, and perceived value are found, satisfaction (ACSI) in the center, and outcomes of satisfaction on the right side, customer complaints and customer loyalty, including customer retention and price tolerance are found The ACSI uses two interrelated and complementary methods to measure and analyze customer satisfaction: customer interviewing and econometric modeling

Vavra, T.G (2007) viewed that the ACSI initiative has at least three primary objectives:

consumer input;

service and product quality relate to economic indicators

measuring the intangible value of the buyer-seller relationship” The ACSI survey process involves collecting data at the individual customer level Casual sequence begins with customer expectations and perceived quality measures, which are presumed to affect, perceived value and customer satisfaction Customer satisfaction, as measured by the ACSI index, has two antecedents: customer complaints, and ultimately, customer loyalty The ACSI is an economic indicator that measures the satisfaction of customers across the U.S Economy “The ACSI interviews about 80,000 Americans annually and asks about their satisfaction with the goods and services they have recently consumed ACSI data is used by academic researchers, corporations and government agencies, market analysts and investors, industry trade association, and consumers This differs from Parasuraman, et

al (1988) conceptualization, which referred only to what the service ‘should be’ Adequate expectations represent a lower level of expectations

SERVPERF

SERVPERF is the performance based service quality (SERVPERF) was identified by Cronin and Taylor (1992) Cronin and Taylor proposed the SERVPERF instrument, which is a more concise performance-based scale; this is an

alternative to the SERVQUAL model The perceived quality model postulates that

an individual’s perception of the quality is only a function of its performance Cronin, et al (1994) continues to debate between the effectiveness of SERVQUAL and SERVPERF for assessing service quality The authors remained unconvinced of both, that including customer expectations in measures of service quality is a position to be supported, and that SERVPERF scale provides a useful tool for measuring overall service quality Kim, et al (2000) empirically compared SERVQUAL (performance minus expectations) with performance-only model (SERVPERF) The authors also concluded that the results from the latter appeared to

be superior to the former It has been acknowledged that such approach limits the explanatory power of service-quality measurement

1.4 The brand loyalty and the service

The research agenda related to the service brand loyalty is specifically challenging due to the complexity of those structures and those determinants of customer’s loyalty behavior (Oliver, 1999)

The four characteristics of the service and its loyalty are:

consumption,

al 1988)

A Brief History of the Brand

Several authors had traced the evolution of brands and identified that the word ‘brand’ probably derived from the Norse word ‘brand’ Symbolic branding emerged even from the Shakespearian times onwards The development of modern brands and brand management was the industrial revolution Low and Fullerton (1994) pointed and stated that various macroeconomic factors allowed innovative companies to lay the foundations of modern brand strategy Packaging improvements provided necessary protection Manufacturers could make their products instantly recognizable This enabled the beginning of the cycle of consumers asking for the same product by name and repeat purchase In the past, newspapers provided mass communication about these brands and these initiations were supported by the establishment of the advertising industry as a legitimate form

of persuading customers to support a brand Legal factors, such as the recognition and registration of trademarks have assisted in the building of brands Rights were patented through registration Time has developed, the law to allow the trade marking and copywriting of not just names but shapes and colors used in packaging thus further protecting the differences between the brands Stuart Roper and Cathy Parker developed Evolution of Branding Theory Modern day consumers relate themselves to brands; and modern day brands communicate in a myriad of ways with consumers The brand has a valuable relationship with its customers that would exist even if the tangible assets of a company were destroyed Brands are now recognized on balance sheets as assets Kim (1990) had described branding as the

“attribution of social and symbolic meaning to a product.” Therefore, a full and clear appreciation of consumers and the markets in which they exist is necessary to develop and maintain a successful brand Thelen (2010) insisted that a brand is a

“synthesis of all the, physical, aesthetic, rational and emotional elements,” Branding however is more than merely a method of differentiation

1.5 Brand Perception

Often our mental makeup are the resultants of those information that has been consciously or subconsciously experienced it; important and useful items are borne in the memory and others are eliminated this process we refer to as a

‘perceptual filter’ This is our reality, though it does not mean that it is an accurate reflection on what is real Thus, perception is the way we filter stimuli and the corresponding feelings and then make sense out of it

Encapsulation of sequential exposure and feeling forms the foundation for

1 The Dimension of Brand Loyalty

Several studies at different times had been devoted towards the understanding the phenomena of brand loyalty over the past three decades (Bandyopadhyay & Martell, 2007) In an effort to define the construct, early studies conceptualized brand loyalty either as a behavior or an attitude This was more expanded to accommodate both attitudinal and behavioral dimensions of brand loyalty However, these two dimensions still remain not satisfactorily explained

(Oliver, 1999) Eminent and scholars had argued that the two dimensional model of brand loyalty falls short, in developing loyalty programs (Jones & Jillian,) Early researchers (Dick & Basu, 1994) had admitted that the existence of the multi-dimensionality prevails in studying brand loyalty Mooradian (1997) work was the first in proposing a multi-dimensional brand loyalty consisting of cognitive loyalty, affective loyalty, conative loyalty, and behavioral loyalty Reynolds (2005) deemed that Oliver’s multi-dimension conceptualization is the most comprehensive evaluation of brand loyalty

Some studies had assessed this conceptualization but only fewer have rigorously examined the concept (Jones & Earl, 1995; Lee and et al 2007) The results supported the existence of the multi-dimension of brand loyalty However, the oncoming eminent researchers partially agreed about the number of dimensions and their inter relationships It is still unclear which are the dimensions can be included in conceptualizing and measuring the brand loyalty and how these dimensions are related and influencing each other Without objective understanding about the various dimensions of the branding loyalty, service firms may not be measuring the best variables in their attempts towards the identification of loyal consumers and to benefit them through designing loyalty programs (Jones & Taylor, 2007) Chandrashekaran, et al (2007) and Oliver (1999) recommended an investigation into the actual fundamental meaning of brand loyalty through assessing and reassessing the dimensional structure of brand loyalty

2 The Relationships between Service Quality, Customer Satisfaction, Perceived Value, Brand Image, and Brand Loyalty

Identification of the determinants of brand loyalty is the common aim and purpose of research in the area brand loyalty Etiology of brand loyalty remains the

focus of brand loyalty from the very beginning (Day, 1969) Till very recently, examination and identification of those factors promoting consumer’s brand loyalty became more specific Consumer’s purchase behavior had been considered as one

of the critical foci of service research (Cronin, et al 2010) While much attention had been given to this issue, the dominant brand loyalty drivers were declared as service quality, perceived value, and customer satisfaction (Cronin, et al 2000; Dick

& Basu, 1994; Zeithaml, et al 1996) These three constructs had also been considered the building blocks of customer loyalty and important in the services literature (Cronin, et al 2000) Recent studies had found out that these constructs in models of service evaluation processes are related to a brand loyalty such as the behavioral intention (Cronin, et al 2000; Johnson, et al 1991)

The results of several studies tend to be overlapping No research had simultaneously compared the relative influence of these three important constructs

on service encounter outcomes (Cronin, et al 2000) This difference had generated a new call for are search to examine simultaneously the relative influence of these constructs towards brand loyalty in the service sector Both corporate image and brand image are another important construct which influenced brand loyalty (Andreassen & Lindestad, 1998) Brand image has an important role in the service industry, where competing services are perceived as virtually identical in term of performance, price, and availability It was quite unfortunate that the bulk of the brand image research had been researched only on tangible products and retail contexts (Bloemer, et al 199*), and little work reports on brand image assessment of service firms Specifically, there had been few research efforts to integrate the role

of brand image into brand loyalty (Chitty, et al 2007; Lai, et al 2009) Thus, extending the model of brand loyalty to include brand image in a service context is a

necessity Kotler had stated that the inclusion of brand image in brand loyalty framework could not only enhance the predictive power of the model, it could provide a better understanding of the factors that motivate the brand loyalty

Brand loyalty theory had been developed primarily in western cultures using North American consumers (Han, et al 2008) These researchers maintained that culturally idiosyncratic characteristics could result in different patterns and strengths

of the variable relationships across cultures towards brand loyalty Brand loyalty outside western countries could yield different results For this reason, De Wulf, noted a need to validate models created in one setting with examinations in other setting Robinson (2005) suggested looking at what creates brand loyalty across different cultures This argument offers the justification of examining the relationships between service quality, customer satisfaction, perceived value, brand image, and brand loyalty

3 The Effect of Brand of Origin on Brand Loyalty and Its Determinants

Consumers are presented with an increasing number of brands Price, warranty, and brand name, consumers use brand of origin as extrinsic cue when making a purchasing decision Considering the importance of brand of origin in affecting consumer purchasing behavior, many studies have examined this issue in tangible product contexts (Lee, et al 2008) Towards understanding the customer perception on brand loyalty and its determinants across brand of origin will help the marketing managers of international and domestic companies to develop an appropriate competitive strategy

Brand loyalty has been the center of attention among academicians and practitioners for many decades; but most of the academicians and the researchers had focused their attention towards the behavioral dimensions and had been focusing

less towards the attitudinal dimensions involved with the brand loyalty Dick and Basu (1994) had stated that contemporary researchers had committed more towards the attitudinal dimensions since the behavioral dimensions fail to provide the actual facts and figures which the contemporary researchers were in need of Behavioral brand loyalty considers only proportional purchase, purchase sequence and probability of purchase Allan had stated that the behavioral brand loyalty cannot explain why consumers who had been repeatedly purchasing, switch away and buy other competitive brands

Dick and Basu (1994, p 100) had also stated that ‘the behavioral definition

is, consequently, insufficient to explain how and why brand loyalty developed and modified up.’

Sekan & Gokhan had stated that in contemporary researches, brand loyalty has been explained in terms of behavioral and attitudinal perspectives Son K, et al had stated that brand loyalty is ‘a deeply held commitment either to re-buy or re-patronize a specific preferred product/service, consistently in the near future, by causing a repetitive purchasing of same brand or same brand-set, despite of the situational influences and marketing efforts having the potential to cause switching behavior.’ Antouridis and Trivellas had insisted that brand loyalty has both attitudinal and behavioral elements, and it is determined by the strength of the relationship between relative attitude and repeat patronage tendered by the consumers Dick& Bastu (1994) had researched and developed a conceptual framework to have a better understanding about brand loyalty which is based on relative attitude and repeated patronage The researchers also stated that the attitude

as a dimension is used to evaluate an object brand position on a favorable continuum; hence brand attitude ranges from high to low

In addition, to explain brand loyalty the uttered that the individual customer may have a positive or negative attitude towards a brand, but in rare situations, consumers may patronize a brand for which they had negative attitude in the past

No attitude is permanent; hence the consumers switch over to other competitive brands due some unavoidable situations which may lead the consumer to opt for the other Attitude is a comparative concept and there is no objective measurement The relative attitude combines with the attitudinal differentiation of a brand gives more indications of brand patronage than relative attitude in isolation (Dick & Bastu, 1994) Any consumer might have had a high or a low altitude towards a brand, however changing situation might affect the consumer’s attitude Even though consumers have better attitude towards a product, they might not buy that brand, because they might have comparatively great attitude towards other brands (Dick & Bastu, 1994)

According to them brand loyalty is the result of relatively high attitude and highly repeated patronage There are significant differences between brand loyalty shown by the consumers towards durables, service and consumption goods In durable goods, once the consumers bought the product, they will keep away from the market for a long time, until there is a need for quitting the previous the product and

to buy a new one However, consumers purchase consumable goods frequently and large in quantity, hence the behavioral aspect of consumer is the appropriate measurement indicator to assess the brand loyalty; whereas durable goods involve more attitudinal aspects of consumer and are important because durable goods are tangible, and it has a long life span when compared to service and consumer goods For a short span of time the consumers will be 100 percent loyal to a single durable goods brand Rundle-Thiele, Sharyn (2005)

1.6 Why it is important to study brand loyalty

It was inferred that the brand loyalty plays significant role in brand extensions as well as brand equity Jan Moller Jensen and Torben Hansen (2000) had stated that brand loyalty increases brand market share ‘brand loyalty increases exponentially the market share, resistance to alternative competitor brands and favors positive word of mouth’

Mokhtar, et al (2000) had stated that brand loyalty is a crucial role in organization profitability and future growth prospect Loyal consumers stick with their suppliers or service providers over the long run They also express their loyalty

by giving a greater share of their wallets to their high-value brands or service providers and by generating word-of-mouth referrals All of these behaviors will directly affect profitability

The Development of Brand Loyalty Studies

The development of brand loyalty studies can be classified as traditional approaches, behavioral approach, attitudinal approach, composite approach and multi-dimension approach

Traditional Approach

The traditional approach of brand loyalty studies initially included a behavioral approach followed by an attitudinal approach, then a composite approach (Han, et al 2008)

Behavioral Approach

The behavioral approach to brand loyalty conceptualizes brand loyalty as behavior (Ehrenberg, et al 1990; Kahn, et al 1986); a customer who tends to buy the same brand of product systematically over a span of time can be regarded as a loyal customer This approach is based on stochastic philosophy, where purchasing

is considered as a random behavior that is very complex and difficult to understand (Odin, et al 2001; Oliver, 1997; Rundle-Thiele, 2005)

Complexity is mainly due to the large number of explanatory variables that influence a consumers’ purchasing behavior making a comprehensive explanation of this behavior is almost impossible (McAlister & Pessemier, 1982; Tucker, 1964) Consequently, it becomes so difficult for marketers to directly influence buyer

behavior in a systematic manner (Li and Petrick, 2008b)

The behavioral approach on brand loyalty was first applied in the 1950s and 1960s (Cunningham, 1956; Tucker, 1964) Majority of those early studies take a behavioral approach by interpreting loyalty as purchase behavior These early studies defined and operationalized brand loyalty as repeat purchasing behavior of a particular brand (Tucker, 1964)

In the brand loyalty measurement, three methods are most frequently applied among researches In this school of thought these are (1) proportion of purchase (Cunningham, 1956; Raj, 1985), (2) purchase probability (Dekimpe, et al 1997; Frank, 1962), and (3) average purchase (Iwasaki & Havitz, 1998; Tellis, 1988; Tucker, 1964) Other less frequent measurements include purchase frequency

(Brody & Cunningham, 1968), purchase sequence (Kahn, et al.1986) and multiple

aspects of purchase behavior (DuWors & Haines, 1990)

Considering the data collection, the behavioral loyalty approach studies typically use data either from the actual consumers’ purchasing behavior, such as scanner panel data or self- reported purchasing behavior The strength of the behavioral approach lies in its measurement of actual purchase behavior (Mellens, et

al 1996; Odin, et al 2001) which is directly related to the performance of the firm

In this case, the purchasing is not likely to be incidental as they are usually based on

behavior over a period of time This measurement of loyalty provides a realistic picture of how well the brand is performing or satisfying the consumers, compared

to competitors (DuWors & Haines, 1990)

Criticism towards Behavioral approach

First criticism is that the processing of loyalty is made in a dichotomous way i.e loyalty or Disloyal; it requires an arbitrary judgment to classify a consumer to be loyal or disloyal (Odin, et al 2001) The classification through these responses often causes difficulty in deciding whether a customer is loyal or disloyal

Second criticism is that the behavioral measures such as repeat purchases have been criticized for lack of conceptual basis and narrow view of what is in fact a dynamic and complex of consumer behavior (Bloemer, et al.1998) In other words, behavioral loyalty fails to distinguish consumers purchasing due to genuine brand preference (true loyal) from consumers who purchase due to cost or convenience reasons (Dick & Basu, 1994; Kumar & Shah, 2004; Mellens, et al 1996; Odin, et al 2001)

Third criticism is that the behavior approach adopts only the frequency of repeated purchase data to decide customers’ loyalty towards a brand; it cannot offer clear understanding of the factors causing or motivating the loyal behavior (Han, et

al 2008; Pritchard, et al 1999; Zeithaml, et al 1996) This approach provides the most accurate representation of past behavior (Jacoby & Chestnut, 1978), this behavior is not necessarily a good representation of future behavior (Day, 1969) Because of these drawbacks, some researchers have argued that brand loyalty cannot

be adequately understood without measuring attitudes towards the brand (Day, 1969; Dick & Basu, 1994; Odin, et al.2001) To conclude, the single dimension of behavioral loyalty is insufficient to explain how brand loyalty is developed and/or modified

Attitudinal Approach

Brand loyalty can also be conceptualized as an attitude towards a specific brand (Odin et al., 2001) Researchers in this stream follow a deterministic approach, in which a limited number of attitudinal dimensions cause direct influence

on repeat purchasing (Li & Petrick, 2008b; Odin, et al 2001; Rundle-Thiele, 2005) This school of thought had suggested that these causes can be isolated from each other and stimulated, resulting in expected consumer behavior Brand loyalty research is focused on customer beliefs, attitudes, and opinions related to purchasing

behavior (Back, 2005; Mellens, et al 1996; Pritchard, et al 1992)

Ajzen, (1989) had stated that attitudes are considered as abstract concepts and resultant construct As a consequence, the conceptualization and measurement

of attitudinal loyalty has more conceptual disagreement among researchers than the behavioral streams

Guest (1944) was one of the first team of researchers to apply attitudinal approach by using ‘consistency of preference’ to measure brand loyalty Since the publication of Guest’s work, researchers in various contexts, had supported this approach and conceptualized loyalty as an attitude toward the brand (Morais, et al 2004), an attachment (Backman, 1991; Pritchard, et al 1999; Rauyruen & Miller, 2007), a commitment (Baloglu, 2002; Pritchard, et al 1999), and intention (Chitty,

et al 2007; Johnson, et al 2006; Kandampully & Hu, 2007; Zeithaml, et al 1996) Most studies in this genre use multiple dimensions of attitudes to measure brand loyalty However, some researchers suggested that a single dimension is an appropriate method to measure brand loyalty Reichheld (2003), for instance, contended that loyalty is best only assessed by willingness to recommend Reichheld

argues that this single loyalty measurement is an effective method to measure customer loyalty compared to customer satisfaction or retention rate

Advantages of using the attitudinal approach

Several advantages are there in using the attitudinal approach as a measurement of brand loyalty

Firstly, the attitudinal measurement of loyalty avoids criticism addressed to behavioral measurement by using interval scale (Odin et al 2001) The attitudinal loyalty scales could provide a deeper analysis such as the prediction of customer future behavior

Secondly, a meta-analysis of attitude-behavior studies by Glasman and Albarracın, (2006) had revealed that attitudes significantly and substantially predict future behavior Hence, understanding attitudinal loyalty can be considered as a better potential predictor of future behavior than past behavior An understanding of attitudes towards the act of buying the brand, may aid marketing managers in the design of programs to modify customers’ behavior, especially their switching behavior from the old to the new to a certain brand (Hennig- Thurau & Hansen, 2000; Jacoby and Chestnut, 1978)

Criticism towards Attitudinal approach

While there seems to be many advantages of using attitude to measure brand loyalty, there are also drawbacks which allowed several criticisms Tucker (1964) criticism was one among the early critics of attitudinal loyalty Tucker, (1964) promoted the use of a purely behavioral measure of loyalty, since he had predicted that scholarly chaos would erupt if attitudes were included in the operationalization

of brand loyalty Tucker’s argument was related to the large number and complicated factors influencing customer’s attitudes A further criticism of

attitudinal loyalty measurement relates to its lacking of predicting power towards an actual purchase behavior (Bennett & Rundle-Thiele, 2002; Mellens, et al 1996) This limited explanatory power could be the result of intervening influences from other factors limiting purchase behavior such as distribution issues and customer situational factors (Jacoby & Chestnut, 1978) This discussion leads towards the conclusion, as in the case of behavioral loyalty, a single dimension of attitudinal loyalty still cannot explain brand loyalty satisfactorily

Composite Approach

Various discussions over behavioral and attitudinal approaches indicate that they do not sufficiently explain brand loyalty Kim et al (2008a) contended that measuring only one facet of brand loyalty could result in measuring unstable attitudes that do not influence the subsequent behavior or a spurious behavior which means the inertial behaviors that are unstable and unpredictable Researchers suggested a simultaneous consideration of both attitudinal and behavioral loyalty in the measurement of customer loyalty (Day, 1969; Dick & Basu, 1994; Jacoby & Chestnut, 1978) Such studies have described brand loyalty as not only an outcome

of repeat purchase behavior, but also the consequences of an attitudinal process

Within brand loyalty studies developing this composite approach, three studies are, arguably, the most influential One among the three studies was Day (1969) who argued that genuine loyalty is consistent purchasing behavior, rooted in positive attitudes toward the brand Day’s two-dimensional conceptualization of loyalty which simultaneously considered attitudinal and behavioral loyalty, suggested a simultaneous consideration of attitudinal loyalty and behavioral loyalty Specifically, Day proposed composite index of loyalty as formulated below

L= P [B]/A Where L: Loyalty

P [B]: Proportion of brand purchase A: Loyal attitude

This formulation insisted that loyalty is influenced by the behavior of proportion of purchase and the attitude towards the brand Attitude refers to involvement and commitment toward a brand (Day, 1969), and a customer with a high proportion of purchasing but low attitude is a spurious loyal customer True brand loyalty occurs when a customer has both a high proportion of purchase and a high involvement and commitment By considering both behavior and attitude, Day (1969) had contributed significantly to the development of brand loyalty research

Jacoby and Chestnut (1978) had defined a broader definition about the concept of loyalty which profoundly influenced the direction of subsequent brand loyalty researches Jacoby and Chestnut (1978) stated “These are that brand loyalty

is (1) the biased i.e not random, (2) behavioral response i.e purchase, (3) expressed over time, (4) by some decision-making unit, (5) with respect to one or more alternative brands out of a set of such brands, and (6) is a function of psychological which includes decision making, evaluative processes” This definition implies that

a consumer is said to be considered loyal, a customer must have brand choices and psychologically assess the advantage of one brand over other brands According to this definition, the psychological aspect of the purchasing process provides an essential basis for differentiating a loyal customer from a repeat purchaser Dick and Basu (1994) conceptualized loyalty as a combination effect of attitude and behavior based on Jacoby and Chesnut (1978) work They suggested that loyalty is the result

of an interaction between a customer’s relative attitude towards a brand (or a store) and their repeat purchase behavior for that brand (or store)

1.7 The loyalty typology

Consumers for our understanding purposes can be classified into four loyalty groups namely truly loyal, spurious loyal, latent loyal and not loyal Consumers who are with high relative attitude and perform repeated purchases are described as truly loyal; consumers who are with high frequency of repeated purchases but are with low relative attitude are considered as spurious loyal consumers A latent loyal customer has a high relative attitude but with low repeated purchase; and those with relatively low attitude and no repeated purchases are not loyal consumers Dick and Bastu, (1994) further suggested that the relationship between relative attitude and repeat patronage is influenced by social norms and situational factors The classification of consumers into four typology of loyalty provides a significant contribution to the marketing practices as through these typologies marketers could predict their future customer retention and defection(Garland & Gendall, 2004).By combining the dimensions of attitude loyalty and behavior loyalty, the composite approach provides a more reliable and valid method of measuring brand loyalty (Oliver, 1997, 1999).Combining those measurements helps researchers understand the future customer behavior and assists marketing managers to develop appropriate marketing strategies to influence their customer’s behavior More specifically, this composite loyalty approach can help to identify loyalty segments and suggest marketing strategies to reach those segments (Jarwis & Mayo, 1986) The composite loyalty approach is used by researchers across broad research contexts (Jacoby & Kyner, 1973; Kumar & Shah, 2004; Lee & Back, 2009; Odin, et al 2001; Baloglu, 2002; Skogland & Siguaw, 2004

Criticism towards Composite approach

While the composite loyalty is well accepted, this approach as in any other approach does have few drawbacks Jacoby and Chestnut (1978) had stated that the basic argument against such measures i.e composite loyalty is that, they typically use laboratory experimentation for assessing the behavioral component This contention relates to the conceptual relation between attitude and behavior By using laboratory experimentation, a researcher could examine directly whether a customer who has intention to buy will really buy Even though this type of experiment could provide a better explanation for such a relationship, this type of testing may not be valued much in applied marketing research owing to several impediments in adopting this method

Another critique of this approach is related to the risk of improper multiplication of attitude and behavior components (Back, 2005) more specifically between behavioral intention and actual behavior While social psychology clearly differentiates behavioral intention from action behavior, researchers namely Bowenand Chen (2001), Jones and Taylor (2007), Lobo (2008), and Rauyruen and Miller (2007) used behavioral intention to measure behavior Although the composite approach could identify loyal segments based on the combination between attitude and behavior, the segment identified is still considered as too broad; as a result, some researchers (Jones & Taylor, 2007;Rundle-Thiele, 2005) argued that these two dimensional concept of loyalty is not sufficient to direct practitioners in their development of brand loyalty programs

Multi-Dimension Approach

Past researchers like Dick and Basu (1994), Jacoby and Chestnut (1978), and Pritchard et.al (1999) had mentioned the less popular existence of multi-