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Customer brand loyalty and service quality

Customer brand loyalty and service quality

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P.S.VENKATESWARAN MSc., MBA., MPhil.,(PhD). Associate Professor, Department of Management Studies, PSNA College of Engineering and Technology, Dindigul. N.ANANTHI, MBA Assistant Professor, Department of Management Studies, PSNA College of Engineering and Technology, Dindigul ABSTRACT: Modern day, Firms are looking in to the needs and wants of their customers. Customer satisfaction is important because many researches have shown that customer satisfaction has a positive effect on an organisation’s profitability. Building a strong brand requires putting customers and their needs at the forefront of every organizational decision. Brands help in building emotional relationships with customers, which in turn brings tangible returns for the organization in terms of customer loyalty. There is also a positive connection between customer satisfaction, loyalty and service quality. Therefore, customer satisfaction, loyalty and service quality are all very important for an organisation to be a successful one. Brand loyalty also provides the firm with trade leverage and valuable time to respond to competitive moves (Aaker, 1991). In sum, loyalty to the firm’s brands represents a strategic asset which has been recognized as a major cause of the brand justice. Keywords: Customer satisfaction, customer loyalty, Service quality INTRODUCTION: A dominant brand creates significant images in the minds of consumers (Keller, 1993), with brand image and reputation enhancing differentiation and thus potentially having a positive influence on buying behaviour.


customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. and putting itself at a competitive disadvantage. organization. It is critical to give customers the opportunity to provide feedback about their overall satisfaction level and specific likes and dislikes. In a competitive marketplace where business competes for customers. or an emotional reaction to the difference between what customers anticipate and what they receive. missing opportunities. Customer Satisfaction is seen as a key performance indicator within business. Building a strong brand requires putting customers and their needs at the forefront of every organizational decision. Brands help in building emotional relationships with customers. measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. regarding the fulfillment of some need. customer retention is “the practice of working to satisfy customers with the intention of developing long-term relationships with them”. It is equally important to consistently measure and monitor that input. product. goal or desire”. According to Hansemark and Albinsson (2004). which in turn brings tangible returns for the organization in terms of customer loyalty. Bain & Company found that. CUSTOMER SATISFACTION: Customer satisfaction is tied directly to profitability. “satisfaction is an overall customer attitude towards a service provider. they tend to be loyal. The same study found that it costs six to seven times more to gain a new customer than to keep an existing one. And if they’re loyal they not only buy more. an increase of 5% in customer retention can increase profits by 25% to 95%. Organisations are increasingly interested in retaining existing customers while targeting noncustomers. 2 . firms will be losing business.Brands represent a business. they refer to other customers. According to Hoyer and MacInnis (2001). If customers are happy. Without satisfaction. According to Anderson and Jacobsen (2000) “customer loyalty is actually the result of an organisation creating a benefit for a customer so that they will maintain or increase their purchases from the organisation. service or celebrity.

depends on the offer’s performance in relation to the buyer’s expectation. contentment. pleasure. 1996 High-quality products and associated services designed to meet customer needs will create customer satisfaction. whether the buyer is satisfied after purchase. or relief. called "expectancy disconfirmation". Satisfaction is influenced. in the end. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products. surprise. Newman. SATISFACTION PROCESS: Source: Rust. The range of emotion is wide with. for example. It is the result of a complex process that requires understanding the psychology of customers. Satisfaction is an emotional or feeling reaction (Westbrook. Keiningham. Taylor. 1978). This high level of satisfaction will produce increased customer loyalty. The figure below shows the main linkage of this process. 3 . Customer satisfaction is a result of your product or service meeting a certain set of customer requirements. Kotler (1998) noted that customer satisfaction. by expectations and the gap between perceived quality and expected quality. Zahorik. Satisfaction is often confused with loyalty.Customer satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate.

A higher retention rate implies that fewer new customers need be acquired. usually cost less to serve. Such loyalty is referred to as "spurious loyalty".CUSTOMERS BRAND LOYALTY: Brand loyalty consists of a consumer's commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of a product or service. Brand loyalty is more than simple repurchasing. Long-established customers tend to buy more. Businesses with high customers' loyalty rates have proven to reach great financial results. and can bring new customers to the firm. Buchanan & Gillies identified six reasons explaining why long-term customers are more profitable than others are: • • • • • • Regular customers place frequent. consistent orders and. or out of convenience. In fact. Satisfied customers often refer new customers to the supplier at virtually no cost. Amine (1998) in her literature distinguishes two main approaches to define the loyalty construct: the behavioural one suggests that the repeat purchasing of a brand over time by a consumer expresses their loyalty. the attitudinal perspective which assumes that consistent buying of a brand is a necessary but not sufficient condition of ‘true’ brand loyalty 4 . a lack of viable alternatives. The cost of acquiring and serving new customers can be substantial. the acquisition cost of a new customer is three to five times more expensive than retention cost. This type of loyalty can be a great asset to the firm: customers are willing to pay higher prices. True brand loyalty exists when customers have a high relative attitude toward the brand which is then exhibited through repurchase behavior. Customers may repurchase a brand due to situational constraints (such as vendor lock-in). therefore. they may cost less to serve. and. Satisfied customers may sometimes pay premium prices Retaining customers makes it difficult for the competitors to enter a market or increase their share. and that they can be acquired more cheaply.

or level of quality at the right price. 2001. and retailer image. & Parasuraman. Service quality literature indicated that perceptions of high service quality and high service satisfaction resulted in a very high level of purchase intentions (Boulding. It is a consumer’s preference to buy a particular brand in a product category. Cöner and Güngör (2002) claimed that customer loyalty was affected by product quality. image. Taylor. Kalra. It is also conceptualized as the consumer’s overall impression of the relative inferiority or superiority of the services (Zeithaml. brand loyalty is a function of both behaviour and attitudes. Cronin & Taylor. 1988). Based on empirical findings in service quality and satisfaction literature. It occurs because consumers perceive that the brand offers the right product features. and Thorpe (2000) also found that customer satisfaction strongly mediated the effect of service quality on behavioral intentions. They also suggested "quality of product and service … is directly related to customer satisfaction.and it must be complemented with a positive attitude towards this brand to ensure that this behaviour will be pursued further. Zeithaml et al. service quality. 1994). Shepherd. In some earlier studies. & Zeithaml. Consumers will initially make a trial product of the brand and. Berry. Zeithaml. service quality has been referred as the extent to which a service meets customers’ needs or expectations (Lewis & Mitchell. Thus. 1992. 1990). service quality has been conceptualized as the difference between customer expectations regarding a service to be received and perceptions of the service being received (Grönroos. Dotchin & Oakland. SERVICE QUALITY: Traditionally. Staelin. & Berry. This perception becomes the foundation for new buying habits. tend to form habits and continue to purchase the same brand because the product is safe and familiar. service quality is one 5 . when satisfied with the purchase.. Dabholkar. Parasuraman. Taylor & Baker. 1997. 1996). 1993. 1990. 1994. and … lead[s] to the loyalty of the customer".

1989). Woodside. Bloemer & Ruyter. responsiveness. Reidenbach & Sandifer-Smallwood. and customer loyalty were different constructs. Luarn and Lin (2004) tested their hypothesized customer loyalty model and found that customer satisfaction. perceived value. equipment and appearance of personnel.caring.willingness to help customers and provide prompt service. Fornell. 1993. 1996. & Thorpe. 1994. Frey. (b) Empathy . Bolton & Drew. (1988) identified five dimensions of service quality (viz. and (e) Responsiveness . and loyalty is one of the consequences of satisfaction (Cöner & Güngör. & Daly. reliability. (d) Reliability . RELATIONSHIP BETWEEN CUSTOMER SATISFACTION AND CUSTOMER BRAND LOYALTY: Several authors have found a positive correlation between customer satisfaction and loyalty (Anderson & Sullivan. Their findings indicated that not only customer satisfaction and perceived value directly affected customer loyalty.physical facilities. The positive impact of visible satisfaction on customer loyalty was stronger than that of hidden satisfaction on customer loyalty (Bloemer & Kasper. 1992). 1990. Cronin & Taylor. 2000).ability to perform the promised service dependably and accurately. 2002. 1993. Dabholkar.knowledge and courtesy of employees and their ability to convey trust and confidence. 1995. assurance. 1994. Cronin & Taylor. individualized attention.of the backgrounds of satisfaction (Anderson & Sullivan. SERVICE QUALITY DIMENSIONS: Parasuraman et al. empathy. 1998). and tangibles) that link specific service characteristics to consumers’ expectations. Spreng & Mackoy. 1991. (a) Tangibles . Shepherd. (c) Assurance . 1992. Numerous studies in the service sector have also empirically validated the link between satisfaction and behavioral 6 . Customer satisfaction literature showed that the relationship between customer satisfaction and customer loyalty depended on the type of satisfaction. but also indirectly affected customer loyalty through commitment. 1992.

Cronin & Taylor. Kalra. CONCLUSION: Based on the views and research done by numerous researchers and academicians. Hart and Johnson (1999) have added that one of the conditions of true customer loyalty is total satisfaction. Bansal & Taylor. Spreng and Mackoy (1996) also showed that service quality leads to customer satisfaction while working on the model developed by Oliver (1997).al (2004) revealed that this relationship also exists in the e-commerce industry. & Zeithaml. In the study by Cronin and Taylor service quality did not appear to have a significant (positive) effect on repurchase intentions (in contrast to the significant positive impact of satisfaction on repurchase intention). whereas Boulding et al. 1999. 1993. though customer satisfaction does not guarantee repurchase on the part of the customers but still it plays a very important part in ensuring customer loyalty and retention. RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: In various studies the relationship between service quality and customer preference loyalty had been examined (Boulding.intentions such as customer retention and word of mouth (Anderson & Sullivan. 1993. RELATIONSHIP QUALITY: Sureshchandar et al. In their study Cronin and Taylor (1992) focused exclusively on repurchase intentions. In a recent study conducted by Ribbink et. whereas Boulding et al. Thus. (1993) found positive relationships between service quality and repurchase intentions and willingness to recommend. 2000). (2003) identified that strong relationships exist between service quality and customer satisfaction while emphasizing that these two are conceptually distinct constructs from the customers’ point of view. Staelin. it can be concluded that customer satisfaction is very important. Customer satisfaction and quality of service BETWEEN CUSTOMER SATISFACTION AND SERVICE 7 . Cronin & Taylor. (1993) focused on the elements of repurchasing as well as the willingness to recommend. 1992).

1111–1125. Marketing Science2 7(6).L. Journal of Economic Psychology.Jennifer(1997).1995. • Keller. New Delhi.‘‘Dimensions of Brand Personality. C.8 Aaker. 36(2). Vol. (1996). P. Baldinger A. Axminstei. Cambridge Strategy Publications Cochran.347–357. 8 . customer satisfaction played a significant role in the mediating relationship between the others and customer loyalty and directly improved customer loyalty. and Sun: A Dynamic Model of Brand Choice When Price and Advertising Signal Product Quality. Measuring and Managing Brand Equity. D. 2nd edition. Bloemer. Assael H. Journal of Advertising Research. and Rubinson J. Boston: Kent Publishing Company. (2002). (1987) Consumer Behavior and Marketing Action.L(2007).2003.The Customer Satisfaction Audit.2003. A et al. pp.were also found to be important antecedents of customer loyalty. Strategic Brand Management-Building.’ Journal of Marketing Research.The Complex Relationship between Consumer Satisfaction and Brand loyalty. Keane. pp 311-29 Bluestein.Customer Satifaction. UK: Free press business. REFERENCES • • • • • • • • Aaker. 2008 INFORMS. Therefore.16. Although customer satisfaction affected customer loyalty less than did service quality. 22-34. Prentice Hall if India. “Brand Loyalty: The Link Between Attitude and Behavior”.K. organisations should always strive to ensure that their customers are very satisfied. Building strong brands.Techniques and Formulas for Success.Paton Press Erdem.A. Tools. M and Kasper. 34(August).

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