CC BY
529
СОЦИАЛЬНО-ЭКОНОМИЧЕСКИЕ ПРОБЛЕМЫ
UDC 383/388
K. V. Adonyeva
THE EFFECT OF BRAND IMAGE on customer BRAND LOYALTY
Since the world is a global marketing now it's getting more difficult for the companies to compete. In order to win the leader position in the marketplace marketing specialists work out different kind of strategies to achieve long lasting success. One of the most significant among these strategies is customer loyalty toward the brand.
The primary purpose of this article is to illustrate relationships between the brand image, customer satisfaction and customer loyalty, to summarize information from different studies and to describe brand image effect on customer brand loyalty.
brand image, customer loyalty, customer satisfaction.
Introduction
Modem business is significantly influenced by the process of globalization. With a trend toward open trade is increasing global economic uncertainty and intense competition. To survive in competitive environment companies should offer new capabilities for competitive success, such as customer relationship. Retailers are facing challenges of retaining the existing and attract new customers. On the International scale it is more important to the companies to maintain existing customers than to attract new customers. One of the reasons is that the cost of attracting a new customer is much higher than the cost of keeping existing one (Titko and Lace, 2010). Thus, customer satisfaction and loyalty are essential to retailers’ success. customer loyalty is a major contribution to sustainable profit growth (Titko and Lace, 2010).
1 Customer satisfaction and loyalty
International business requires understanding cultural differences of consumers in different markets. The ability to gain insight into cultural differences
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and consumer behavior in each target market and develop appropriate marketing strategies will determine international marketers’ success in different countries. Over the past decades, due to aggressive competition in the retail business environment, a company’s success largely depended on the satisfied customers who are willing to purchase products or services repeatedly (Siu and Cheung, 2001). As the ultimate goal of any business is to establish a loyal customer base in order to ensure the profit and longevity of the business, understanding consumers’ patronage behavior has been identified as the key to the success of a retail business and has become a premier objective for marketers (Sirgy et al, 2000).
In the context of Latvian National economics it’s crucial for local firms to remember about customer relationship management. If local firms will not pay attention toward customer loyalty they will lose customers in the intensive competition. Loyalty is increasing customer retention. However increased customer retention, as a result of increased loyalty, has two important effects for firms. First, it can lead to a gradual increase in the firm’s customer base which is particularly necessary in an era of low sales growth. Second, the longer the customer remains loyal to the firm, the larger the profits earned from each individual customer (Rose, 1990).
Customer satisfaction is one of the most important factors that contribute to the formation of customer loyalty. Several studies have shown that there is a direct link between customer satisfaction and loyalty: satisfied customers become loyal and dissatisfied customers move to another vendor (Heskett et al, 1994). Hallow-ell R. (1996) argues that the literature pertaining to relationship among customer satisfaction and loyalty can be divided into two groups. The first, service management literature, proposes that customer satisfaction influences customer loyalty, which in turn affects profitability (Hallowell, 1996). Proponents of this theory include researchers such as Anderson E. W. and Fornell C., Heskett J. L, Reicheld F. F. and Sasser W. E. jr., Rust R. T., Bowen J. T., Zeithaml V. A. (Hallowell, 1996). These researchers discuss the links between satisfaction, loyalty, and profitability. Statistically-driven examination of these links has been initiated by Nelson E. (1992), who demonstrated the relationship of customer satisfaction to profitability among hospitals, and Rust R. T. and Zahorik A. J., who examine the relationship of customer satisfaction to customer retention in retail banking (Nelson et al, 1996). The second relevant literature is found in the marketing area. It discusses the impact of customer satisfaction on customer loyalty. Customer loyalty can be defined either based on behavioral, attitudinal or composite approach. Behavioral loyalty has been considered as purchase sequence, proportion of purchases devoted to a particular brand or probability of purchase, while attitudinal brand loyalty refers to stated preferences, commitment or purchase intentions of the customers (Sandoh, 2009). A few academics suggest that using the composite approach (attitudinal and behavioral approach) provides a more powerful definition of brand loyalty. San-doh, S. L. (2009) highlights that all three approaches have been argued by several scholars and have several limitations. Sandoh, S. L. (2009) has cited Jacoby J. and
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Chestnut R. that they argued that the behavioral measures simply represent the static outcome of a dynamic decision process; therefore this approach makes no attempt to understand the factor underlying brand loyalty purchasing and is insufficient to clarify the causative factors that determine how and why brand loyalty develops or is modified (Sandoh, 2009). The attitudinal measures are concerned with consumer feelings toward the brand and stated intention such as likelihood to recommend and likelihood to repurchase the product. However Sandoh, S. L. (2009) consider that the entire brand loyalty phenomenon assessed if the attitudinal loyalty is not extended over action behavior. In relation to loyalty, the linkage between attitude and behavior approach were found to be weak. Sandoh, S. L. (2009) indicated that those studies that used actual behavior outcomes, showed weak associations or negative relationships with satisfaction. Sandoh, S. L. (2009) has mentioned that Rundle-Thiele S. and Bennett R. suggests that attitudinal loyalty measures should be appropriate to predict future brand loyalty under these circumstances: where the market is not stable, where there is a propensity towards sole brands, and where there is a high involvement and high perceived risk.
customer satisfaction depends on how products and services meet or surpass customer expectation (Kotler et al, 2001). The impact of satisfaction on loyalty has been one of the most popular subjects of studies. Fornell c. (2006) developed a model called the customer Satisfaction Index aimed at encouraging organizations adaptation of market-orientation and to recognize that the outcomes of perceived quality and brand image could be customer satisfaction. Fornell c. study concludes that brand image impacts on customer perceived quality and satisfaction with the result of strong satisfaction being possible customer loyalty (Fornell et al, 2006). customer satisfaction has been used as a basic measure to explain customer loyalty in AcSI (American customer Satisfaction Index) model. AcSI reports scores on a 0-100 scale at the national level and produces indexes for 10 economic sectors, 45 industries (including e-commerce and e-business), more than 225 companies, and over 200 federal or local government services. In AcSI model customer satisfaction has three antecedents: perceived quality, perceived value and customer expectations (carpenter and Fairhurst, 2005). In addition to the company-level satisfaction scores, AcSI produces scores for the causes and consequences of customer satisfaction and their relationships. The measured companies, industries, and sectors are broadly representative of the U. S. economy serving American households. The most popular index to measure customer satisfaction and loyalty in European countries is EPSI (European Performance Satisfaction Index) rating. EPSI Rating is a system to collect, analyze and disseminate information about image, preferences and perceived quality as well as loyalty of customers and other stakeholders to commercial entities and other organizations (Titko and Lace, 2010). In both model increased satisfaction should increase customer loyalty. When the satisfaction is low customer have the option to exit (leave to another vendor) or express their complaints. Researches have shown that 60-80 % of customers who
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defect to a competitor said they were satisfied or very satisfied on the survey just prior to their defection (Low and Lamb, 2000). Definitely customer satisfaction is the one of the most important factors influencing customer loyalty but it is not the only factor having an impact on customer loyalty.
2 Brand image and customer loyalty
Besides satisfaction where are other factors influencing customer loyalty. One of the most complex factors is brand image. A widely accepted view is that brand image represents customers’ perceptions of a brand as reflected by the brand associations held in consumer memory (Keller, 1993). Keller K. (1993) considered brand image as “a set of perceptions about a brand as reflected by brand associations in consumer’s memory”. A similar definition to Keller’s was proposed by Aaker D. A. (1991), whereby brand image is referred to as “a set of associations, usually organized in some meaningful way”. Biel A. L. (1992) however defined brand image as “a cluster of attributes and associations that consumers connect to the brand name”. Keller K. (1991) argued that these associations could originate from customers direct experience or from information obtained on a market offering or due to the impact a pre-existing associations with an organization had on consumer. Brand image is, therefore, the mental picture or perception of a brand or a branded product or service and includes symbolic meanings that consumers associate with the specific attributes of a product or service (Dobni and Zinkhan, 1990). Brand image represents “the reasoned or emotional perceptions consumers attach to specific brands” a set of beliefs held by customers about a particular brand, based upon some intrinsic and extrinsic attributes of a market offering resulting to perceived quality, and customer satisfaction (Low and Lamb, 2000). Brand image has been measured based on attributes (Koo, 2003); brand benefits/values (Hsieh, 2004); or using Malhotra’s (1981) brand image scale. Measuring image based on the above definition would help marketers to identify the strengths and weaknesses of their brand as well as consumers’ perceptions toward their product or services. Looking into Keller’s (1993) conceptualization of brand image, it is considered a perception about a brand as reflected by the brand associations held in consumers’ memory. He suggested that “brand associations” comprise of brand attributes, brand benefits, and overall brand attitudes. To Keller K. (1993) attributes are “descriptive features that characterized a product or service - what a consumer thought the product or service is or has and what is involved with its purchase or consumption” (Keller, 1993). Attributes can be classified into product-related attributes and non-product-related attributes (i. e. price, packaging or product appearance information, user and usage imagery). Product-related attributes refer to the ingredients necessary for performing the product or service function sought by consumers while non-product-related attributes refer to the external aspects of
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the product or services that relate to its purchase or consumption (Sandoh, 2009). As for benefits, these are considered “the personal value consumers attach to the product or service attributes - that is, what consumers think the product or service can do for them” (Keller, 1993). Keller K. (1993) described that this image benefits can be classified into functional, experiential and symbolic benefits, which was originally derived from the work of Park C. W. Here, the functional benefits are related to the intrinsic advantages of product or services consumption and usually correspond to the product related attributes (Park et al, 1986). For example, experiential benefits refer to “what it felt like to use the product or services and usually correspond to the product related attributes”, while symbolic benefits were associated with the underlying needs for social approval or personal expression and outer-directed self-esteem and basically corresponded to non-product related attributes (Sandoh, 2009). For brand attitude, Keller K. (1993) referred to Wilkie’s W. definition of brand attitudes which was “consumers’ overall evaluations of a brand”. Overall, image can generate value in terms of helping customer to process information, differentiating the brand, generating reasons to buy, give positive feelings, and providing a basis for extensions (Aaker, 1991). Creating and maintaining image of the brand is an important part of a firm’s marketing program and branding strategy (Malhotra, 1981). Therefore, it is very important to understand the development of image formation and its consequences such as satisfaction and loyalty.
Where are several studies investigating brand image influence on customer satisfaction. Following the results from one of these studies made in Chine by Ogba I. E., Tan Z. (2009), one can conclude that brand image can positively influence customers’ perceived quality on a market offering and also boost customer satisfaction, loyalty and commitment towards a market offering. It is also evident that these variables have strong association to and with brand image (Ogba et al, 2009). This implies that a good brand image is that which impacts positively on this entire customer variable: customer satisfaction, loyalty, perceived quality and commitment to a market offering and not necessarily on one or few of the variables (Ogba et al, 2009). This, therefore, represents the degree of the relevant of the study, that a good brand image must positively impact on customers’ loyalty and perceived quality and should also influence to a greater degree the extent to which customers perceives a market offering and express satisfaction to such offering for long-term delight and sustainable profit (Ogba et al, 2009).
Another study was made by Sandoh S. L. (2009) in Malaysia. In this study was examined the effect of brand image benefits on satisfaction and loyalty intention in the context of color cosmetic product (see Figure 1).
The results of the study showed appearance enhances image does indeed have both direct and an indirect effect that loyalty through overall customer’s satisfaction, thus providing support for only a partially mediated effect of overall satisfaction (Sandoh, 2009). This underlines the importance of appearance enhances benefit to cosmetic users as a determinant of brand loyalty as well as
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Fig. 1. The theoretical framework (Sandoh, 2009)
customer’s satisfaction (Sandoh, 2009). Therefore, the results suggested that to improve customer’s loyalty and customer’s satisfaction in the context of beauty product, marketers should improve the brand appealing strategy that relates to aspects of how the branded product can provide a solution to their customer’s needs and expectation, the good impression of using their brand, and the effectiveness of the brand (Sandoh et al, 2007). Overall customer’s satisfaction was found to fully mediate the relationship between functional image benefits and loyalty intention. This shows that in order to maintain and build loyalty customers, marketers must focus on efforts to improve satisfaction among its customers while at the same time strengthen their brand functional appeal strategy (Sandoh et al, 2007).
Na W. B., Marshall R., and Keller K. L. (1999) argued that “image cannot be measured by attribute measurements alone but must include measurements of consumers’ perceptions of the value and benefits attainable from using the brand”. This indicated the importance of examining the effect of image based benefits on consumer’s satisfaction. Where are several studies examining the impact of “benefits” that customer received from interpersonal relationships and “benefits” derived from shopping purchase experience on customer’s satisfaction (Sandoh et al, 2007). For example, Reynolds K. E. and Beatty S. E. (1999) found that customers were more satisfied with the salesperson when he/she perceived high social and functional benefits happen. In addition, Carpenter J. M. and Fairhurst A. (2005) identified two types of shopping benefits as desired by consumers: utilitarian and hedonic benefits in the retail branded purchasing context. They found that both utilitarian and hedonic benefits have a positive effect on customer’s satisfaction.
Conclusion
Based on the outcomes from review of literature and conceptual frameworks relating to brand image, customer satisfaction and loyalty several significant issues are highlighted.
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Firstly, in the era of globalization customer loyalty is one of the most important tools to win in intensive competition in international scale. The main purpose of customer loyalty is to increase customer retention. Increased customer retention, as a result of increased loyalty, has two important effects for companies. First, it can lead to a gradual increase in the company’s customer base which is particularly necessary in an era of low sales growth. Second, the longer the customer remains loyal to the company, the larger the profits earned from each individual customer (Rose, 1990).
Secondly, customer satisfaction is one of the most important factors contributing the formation of customer loyalty. Main factor in both models for measuring customer loyalty through customer satisfaction - ACSI and EPSI - increased satisfaction should increase customer loyalty. When the satisfaction is low customer have the option to exit (leave to another vendor) or express their complaints. Definitely customer satisfaction is the one of the most important factors influencing customer loyalty but it is not the only factor having an impact on customer loyalty.
Thirdly, besides satisfaction where are other factors influencing customer loyalty. One of the most complex factors is brand image. A widely accepted view is that brand image represents customers’ perceptions of a brand as reflected by the brand associations held in consumer memory (Keller, 1993). Brand image can positively influence customers’ perceived quality on a market offering and also boost customer satisfaction, loyalty and commitment towards a market offering. It is also evident that these variables have strong association to and with brand image (Ogba et al, 2009). This implies that a good brand image is that which impacts positively on this entire customer variable: customer satisfaction, loyalty, perceived quality and commitment to a market offering and not necessarily on one or few of the variables (Ogba et al, 2009). Creating and maintaining image of the brand is an important part of a firm’s marketing program and branding strategy (Keller, 1993). Therefore, it is very important to understand the development of image formation and its consequences such as satisfaction and loyalty.
customer loyalty can be influenced directly through customer satisfaction and indirectly through brand image. Overall, Sandoh S. L. jr. (2007) tested a model that proposed brand image benefits to have an effect on satisfaction, which in turn leads to customers’ loyalty. The findings imply that the model proposed by Sandoh S. L. jr. (2007) is possible to be used.
Finally, in order to create a successful brand, marketing managers should be more devoted on building brand image, customers’ satisfaction and brand loyalty as part of their branding strategy. By maintaining and strengthening the brand images and values, it will position the brand positively in the minds of consumers. Therefore, there is a need to understand the important roles of three branding strategies: brand image, brand satisfaction and brand loyalty in order to enhance their brand appeal.
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