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Brand_and Retailer Loyalty

Brand_and Retailer Loyalty

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Journal of Product & Brand Management

Emerald Article: Brand and retailer loyalty: past behavior and future intentions Michael T. Ewing

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To cite this document: Michael T. Ewing, (2000),"Brand and retailer loyalty: past behavior and future intentions", Journal of Product & Brand Management, Vol. 9 Iss: 2 pp. 120 - 127 Permanent link to this document: http://dx.doi.org/10.1108/10610420010322161 Downloaded on: 20-05-2012 References: This document contains references to 18 other documents Citations: This document has been cited by 3 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 6216 times.

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com 120 JOURNAL OF PRODUCT & BRAND MANAGEMENT. Consumer behaviour. whether to remain loyal to the previously purchased make or switch brands hangs the fortune of automobile manufacturers and retailers. In addition. Western Australia Keywords Brand loyalty. the individual is likely to report his or her behavioral expectation rather than intention when responding to the intention query (Warshaw and The author thanks B. manufacturers sought to drive new vehicle sales by converting owners of competing brands. particularly when the time for performance of a reasoned behavior is too remote for the individual to have crystallised plans (such as buying a car some time in the future). 9 NO. 120-127. Apparently. 1995). willingness to recommend does not seem to be influenced by past behavior. 1995). Retailing. as well as willingness to recommend the purchased brand and retailer from which it was purchased. Ramaseshan. intentions). for example. Limitations are discussed. Lastly. Caruana and three anonymous reviewers for their comments on an earlier draft of this article. individual-level observed behavior differs from planned behavior (i. However. 2 2000.e. 1966). Ewing Senior Lecturer in Marketing. 1989). pp. The current issue and full text archive of this journal is available at http://www. Perth. # MCB UNIVERSITY PRESS. there is a strong case for independent effects of past frequency on reported intention to try (Bagozzi and Yi. Findings indicate that while not without its flaws. When an individual is unclear about his or her intentions with respect to some act. it would appear as if the brand/consumer interface offers greater predictive ability than the retail/consumer interface. but the higher the respondent's expectation to purchase a brand. On that decision. More recently. In the past. purchase expectations/intentions data remain a valid research metric. given that in many cases. Customer loyalty Abstract Brand loyalty is investigated by examining actual past behavior and its impact on future behavioral intentions: in terms of expectation to purchase the same/another brand from the same/another retailer. Furthermore.An executive summary for managers and executive readers can be found at the end of this article Brand and retailer loyalty: past behavior and future intentions Michael T. purchase intentions are not always accurate predictors of subsequent purchase behavior (see for example Juster. Quality products. Curtin University of Technology. VOL. Market research firms often use purchase intentions to forecast new products' sales potential. individual-level discrepancies do not often resolve at the aggregate level. and directions for future research suggested. Bemmaor (1995) questions the predictive ability of purchase intentions data. which results in a bias between mean stated purchase intent (or proportion of intenders) and subsequent proportion of buyers (Bemmaor. 1991). The same applies to retailer recommendation.emerald-library. A. 1061-0421 . positive showroom experiences and good after-sale service are all essential to the loyalty formula and consequently manufacturers have been putting considerable marketing effort in this direction (Illingsworth. the higher will be their willingness to recommend that brand. the emphasis has shifted towards retaining existing customers. Introduction Some car buyers switch from one brand to another at trade-in time whereas others display consistency of choice from purchase to purchase (Sambandam and Lord. Observed behavior differs from planned behavior The measurement of purchase intentions has been pervasive in modern marketing. School of Marketing. Here.

Ford owning/controlling Jaguar. rebates and low interest finance rates. sustainable product differences. Volvo and Aston Martin) and co-operation between manufacturers (e. as well as the likelihood of making that purchase from the same dealer. This study focuses on self-reported behavioral expectations in terms of the individual's likelihood to purchase the same brand again. past behavior (measured in terms of repeat purchases) and future purchase expectations are investigated within an automotive typology. 1961. but it might be expected that manufacturer (brand) satisfaction is a determinant of intended brand repurchase. The dealership's predicament is compounded by the increasing competition from non-franchised outlets. Cunningham. Stearns et al. and dealer satisfaction a determinant of intended dealer repurchase. the relationship between future intentions and past behavior is considered in an attempt to investigate the predictive ability of the latter. customer manufacturer satisfaction might affect intended dealer repurchase.b) investigate the role of past behavior. The brand/retailer case Just as an interrelationship exists between store loyalty and brand loyalty in the purchase of branded goods (cf. 1990). when factoring in discounts. There is also a distinction between customer satisfaction with the manufacturer (brand). The second set of hypotheses (H2a. Tranberg and Hansen.Davis. 1982. Ford/VW. and customer satisfaction with the dealership (retailer). 1985).g. VOL. The tacit assumption is that a satisfied customer will remain ``loyal'' to the brand (all other factors being equal). the growing oligopolisation of the manufacturing industry (e. Both aspects of satisfaction will influence the customer's next purchase decision. in terms of brand purchase expectations. 9 NO. and customer dealer satisfaction might affect intended manufacturer repurchase. price parity inevitably results. if any. Thus.. A satisfied customer will remain ``loyal'' to the brand The study In this study. it is hypothesized that: H1a: Expectation to purchase (Brand) is positively influenced by Repeat Purchase Behavior (Brand). The first two (H1a. a number of hypotheses have been developed. 1970. in terms of brand of car previously owned and dealership purchased from. Mills. The degree of price competition at the retail level is so intense that. H1b: Expectation to purchase (Brand) is positively influenced by Repeat Purchase Behavior (Dealer). it might be expected that an interrelationship exists between dealer loyalty and brand (manufacturer) loyalty in the case of automobiles. Franchised dealers must prove to their customers that they are competitive and must offer a satisfying service that is visibly different to non-franchised outlets.b) also investigates the role of past behavior on anticipated future dealer rather than brand purchase expectations. To this end. Carman. GM/Toyota) has resulted in few. 2 2000 121 . 1983). It is again assumed that a satisfied customer will remain loyal to the dealer. 1986. and the relationship between the two discussed. In the modern automotive marketing environment. If customers are satisfied with every aspect of dealer service they are more likely to give the dealership favourable consideration for future purchases (Lovell. In particular. Furthermore. this is indeed a fair assumption to make.g. Mazda. JOURNAL OF PRODUCT & BRAND MANAGEMENT. A distinction is drawn between brand retention and dealer retention. 1956. Moreover. Ford/Nissan. on anticipated future behavior.

but may for example have company/lease cars assigned to them at their place of work. The third set of hypotheses (H3a. Respondents were randomly recruited off a commercial database of new vehicle owners (customers who had bought a new vehicle in the last three years). H2b: Expectation-to-purchase (Dealer) is positively influenced by Repeat Purchase Behavior (Brand). 35.1 percent female. Customers/respondents who did not purchase the same brand were also categorised together.b) investigates the role of past behavior on consumers' willingness to recommend both brand and retailer. Excluded from the sample were large car owners (less than 15 percent of the total market).8 percent 25-34. 45. These links seem particularly important to test given the influence of positive word-of-mouth. The last set of hypotheses (H4a.b) investigates the relationship between expectation to purchase and willingness to recommend (both brand and dealer). and 27. VOL. those respondents for whom no behavior-based loyalty quotient can be computed. 9 NO. the higher the Willingness to Recommend the brand. H3b: Willingness to Recommend (Dealer) is positively influenced by Repeat Purchase Behavior (Dealer). Interval level dependent 122 JOURNAL OF PRODUCT & BRAND MANAGEMENT. Once again. the higher the Willingness to Recommend the dealer. Two ten-point Likert scales anchored with Not at all likely = 1. Of the sample 72. it is assumed that a satisfied customer will be more inclined to recommend manufacturer and/or dealer. H3a: Willingness to Recommend (Brand) is positively influenced by Repeat Purchase Behavior (Brand).6 percent over 50 years.3 percent 18-24 years. South Africa. Respondents varied widely in terms of age: 9. Measures and analysis Single-item measures of self-reported intentions to perform specific behaviors were employed to measure purchase intentions (by both manufacturer and dealer). H4a: The higher the Expectation to Purchase a brand. and all respondents owned/drove small and mediumsized cars ± representing approximately 85 percent of the total new car market in South Africa.9 percent were male. respondents completed the questionnaire prior to evaluating the new models (this also prevented bias with regard the future intention questions which could have been induced after exposure to the new models). The sampling method employed succeeded in providing respondents who varied greatly in terms of personal characteristics. and Intended Dealer Purchase. In other words. and Extremely likely = 10 were used to measure: Intended Brand Purchase. H4b: The higher the Expectation to Purchase from a dealer. respondents whose last car owned was the same brand as their current car were grouped together. 2 2000 . There was also a ``not applicable/other'' category which refers to respondents who do not buy their own cars.H2a: Expectation-to-purchase (Dealer) is positively influenced by Repeat Purchase Behavior (Dealer).3 percent 35-49 and 9. Self-administered questionnaire Data collection Data were collected using a self-administered questionnaire distributed to respondents at a new model vehicle evaluation clinic held in Johannesburg. To avoid fatigue. In terms of repeat purchase behavior.

832. Four hypotheses are accepted (H1a. Expectation-recommendation: dealer JOURNAL OF PRODUCT & BRAND MANAGEMENT. F = 386. Future brand purchase expectation is dependent on past brand repeat purchase behavior. p < 0. This could be interpreted to suggest that past behavior is not necessarily the best predictor of future behavior and more specifically.732 R square 0. regression analysis was employed. This is most likely because purchase intentions and likelihood of recommendation is so high. In terms of the relationship between expectation to purchase (brand) and willingness to recommend (brand).548 Std error of the estimate 1.536 Adjusted R square 0.001).measures and correlated ordinal predictors led to the use of one-way analysis of variance (ANOVA) to test hypotheses H1 to H3.6. Similarly.8629 Table II.741 R square 0.05). Future dealer purchase expectation is not dependent on past dealer repeat purchase behavior. Discussion This study explored the increasingly important issue of customer retention in the strategy of South African automotive manufacturers and dealers. H2b is rejected.549 Adjusted R square 0. and four rejected (H2a. There appears to be no relationship whatsoever between willingness to recommend either the brand or the dealer. Past behavior-future expectations: H1a is accepted (F = 7. H1b is also accepted (F = 5. H3a and H3b).01).536.5525 Table I.001). Hypotheses H3a and H3b are therefore also rejected. the ANOVA confirmed that there is no significant difference. p < 0. based on past behavior. This is Variables Model 1 Entered PB Removed R 0. (2) intend to purchase from the same dealer. First. H4a and H4b). Hypothesis H4b is therefore also accepted (see Table II) (R2 = 0. To test H4 (relationship between expectation to purchase and willingness to recommend). 2 2000 123 . H2a is rejected.548. between those respondents who: (1) intend to purchase from the same manufacturer. and (4) would recommend their current dealership. F = 374. VOL. Expectation-recommendation: brand Variables Model 1 Entered PD Removed R 0. Similarly. Hypothesis H4a is accepted (see Table I) (R2 = 0. p < 0. there is a significant relationship between expectation to purchase (dealer) and willingness to recommend (dealer).035.4. that customers' intentions are generally overstated.535 Std error of the estimate 1. Results Results of the analysis of variance and regression analysis are reported. (3) would recommend their current manufacturer. Future dealer purchase expectation is not dependent on past brand repeat purchase behavior. p < 0. H1b. and repeat purchase behavior. Future brand purchase expectation is dependent on past dealer repeat purchase behavior. 9 NO. H2b.

Consumer Behavior and Marketing Action. 116-18. 8th ed. while respondents were randomly recruited to partake in the research. XXXII. 1994. Using product-based segmentation. such as changes in income. Bemmaor.. 67-76.P. Absent from the sampling frame were large-size automobile owners. First. A. pp. and Yi. country-of-origin or family tradition). P. (1961). Bagozzi. and Warshaw. Vol. R. Second. pp. ``Brand loyalty. they report a behavioral expectation rather than intention. 17.. R. Cunningham.M. 266-79. namely the automotive industry. Vol. 124 JOURNAL OF PRODUCT & BRAND MANAGEMENT.F. 34. 7. pp. respondents were drawn from small and medium-sized automobile owners only. Dryden. A fourth limitation is the exclusion of a measure of the effect of social norms on reasoned action (which could perhaps have been captured by measuring perceptions of market share. what. H. Vol. Vol. P. (1989). the study was limited in that it was confined to a single typology. Harvard Business Review.M.M. future intentions and recommendation in automotive marketing. South-Western College Publishing. J. Y. R. J. the sampling frame did not fully represent the population at large. ``Correlates of brand loyalty: some positive results''. (1995). While the latter segment represent less than 10 percent of the sample population. purchase expectations/intentions data are still a valid research metric in high involvement product categories. Cincinnati. Like all projects of a similar nature. this study has some obvious limitations which signal caution to the generalisability of the findings. longitudinal studies provide for stronger inferences. A third limitation is the cross-sectional design employed. Journal of Marketing. Bagozzi. Last. 1996. Blackwell. The brand/consumer interface offers greater predictive ability than the retail/consumer interface. unforeseen environmental events. (1995). how much?''. VOL. positive word-of-mouth) does not appear to be influenced by past behavior. Wilkie. and Miniard. by definition. 1996). status. Valid research metric In conclusion. a limitation. Orlando. Harvard Business Review. 2 2000 . In general. 176-91. ``The degree of intention formation as a moderator of the attitude-behavior relation''. When it is too remote for the individual to have crystallised plans. and could also consider constructing a richer empirical model of antecedents and consequences. (1970). stability of intentions. 127-8. willingness to recommend (i. 9 NO. Cunningham. References Assael.D.W. Vol. ``Predicting behavior from intention-to-buy measures: the parametric case''. Engel et al. pp. pp.in line with Bagozzi and Warshaw's (1990) observation regarding time frame between reporting an intention and actual behavior. This would certainly apply to the automotive purchase decision-making process. FL. (1990). ``Customer loyalty to store and brand''. Retail behavior is probably influenced by numerous situational variables. Vol. Journal of Consumer Research. R. Social Psychology Quarterly. 1995. Consumer Behavior. R.R.C. its exclusion is still. (1996). Engel. Carman. (1956). ``Trying to consume''. degree of voluntary control. OH. where. family structure.P.e. Limitations of the study The empirical research addresses past behavior (loyalty). 127-40. 5th ed.. Ongoing research into past behavior and future intent might attempt to develop better measures than those used in this study. Peter and Olson. pp. 52.. 39. Journal of Marketing Research. and new information all contribute to future behavior (Assael.

``Relationship marketing: pursuing the perfect person-to-person relationship''.. Vol. pp. Vol. ``On the quality of service encounters: an agency perspective''. Mills. 213-28. John Wiley. ``Patterns of brand loyalty: their determinants and their role for leading brands''. NY.. pp. L. pp. pp. (1990). Unger. (1991). Journal of Experimental Psychology.W. Wilkie.K. Vol. Journal of Business Research. R. and Olson. 11. European Journal of Marketing.A. Journal of the Academy of Marketing Science. VOL. 4th ed. pp. and Lesser. (1994). Warshaw. Vol. ``Intervening variables between satisfaction/ dissatisfaction and retail patronage intention''. P. 1. Winter Educators Conference. (1982). USA.L. 57-65. 5.T. 179-82. J. New York. F. (1995). Vol. J. 20. Vol. Consumer Behavior. Consumer Behavior and Marketing Strategy.Illingsworth. (1996). & JOURNAL OF PRODUCT & BRAND MANAGEMENT. Lovell. and Lord. Tranberg. W. J. 49-52. Stearns. p. 2 2000 125 . pp. 31-41. and Hansen. ``Disentangling behavioral intention and behavioral expectation''. 3rd ed. 81-109. 61. Irwin. Standard Automotive Engineering Journal. H. J. F. K. 21. Sambandam. 83 No. F. 20.P..R. (1985). ``Customer satisfaction: the new reality''. 23 No. 80.M. J.P. American Marketing Association. Journal of Services Marketing.S. (1983). Peter. and Davis. ``Switching behavior in automobile markets: a consideration-sets model''. Juster. 9 NO. Vol.D. ``Consumer buying intentions and purchase probability: an experiment in survey design''.C. W. 65-74. (1966). pp. Journal of the American Statistical Association. (1986). P.R.

2 2000 .126 JOURNAL OF PRODUCT & BRAND MANAGEMENT. VOL. 9 NO.

2 2000 127 . 9 NO.JOURNAL OF PRODUCT & BRAND MANAGEMENT. VOL.

the consumer is expressing is an ``expectation'' rather than an ``intention''. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present Executive summary and implications for managers and executives There are no definite answers ± only research Market research is important to businesses. I expect to buy a car from you again. If you ask what the consumer ``intends'' you should ± for many respondents ± get the honest answer. as we know. . 126 JOURNAL OF PRODUCT & BRAND MANAGEMENT. 9 NO. Trying to get to the bottom of this dilemma will assist businesses in getting the most from market research. . We cannot take these statements of expectation as a real prediction of future consumer behaviour. ``. Research represents the only chance for a firm to predict the future.This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. We do not know the customer's intention because that customer does not himself know his intention. ceteris paribus. The obvious next question is to ask whether there exists other information that can assist in prediction. in reality. you should understand what question you are asking of the consumer. as we've all observed. "If you buy a car tomorrow. What. It is this fact about the role of market and consumer research that creates the cynicism and distrust described above. which brand will you buy?" Seems a reasonable question until you appreciate the fact that the consumer has no intention of buying a car tomorrow ± indeed it may be two years or more before the next purchase. As a result some business people have become wholly cynical about market research and its value in business and marketing planning. . 2 2000 .individual-level observed behaviour differs from planned behaviour. Yes. The result is that the consumer gives a dishonest reply so far as intentions are concerned. The extent of possible variables affecting the purchase decision ± especially for a significant purchase such as a car ± means that our marketing efforts only start with the discovery of consumer expectations. One popular piece of additional information applied to statements of intention is the consumer's past behaviour. Ewing examines one situation where actual consumer behaviour commonly differs from stated intentions. VOL. taken alone such statements do not represent a reliable prediction. ``Haven't a clue. The consumer can't answer honestly because that consumer hasn't thought about purchasing a car until you asked. Expectations not intentions ± a better view of consumer responses Ewing points out that. Yet. Second. But things might change considerably between now and the time when I replace my current car. We can only get future predictions generally right never specifically right ± unless of course you're employing a clairvoyant.'' and the further ahead in time of the purchase. . The first lesson for business people is to treat market research findings with caution ± especially when they are about the future actions of consumers. We know the consumer's ± average ± expectations but we also know that. All we have is an expression of current expectations. research into ``purchase intentions'' often gives misleading results. guv!'' But the research process forces an answer from the consumer ± they have to make a choice. the greater the chance of different behaviour from the stated intention.

We can act on that research by adjusting our marketing to reflect consumer expectations and by addressing some of the factors that might cause our customer to go elsewhere. 2 2000 127 . in the end.customers' intentions are generally overstated.past behaviour is not necessarily the best predictor of future behaviour and. But this general observation does not answer the specific question ± will consumer X behave the same way in the future as in the past? You can see the difficulty ± the answer from consumer X is ``dishonest'' (consumer X does not know how he will behave in the future) even though that consumer acted according to stated expectations in the past. must accept that research only provides information about how we might handle the risks of marketing. that the aggregation of the ``dishonest'' responses creates an ``honest'' finding? Ewing's findings substantiate this point and he observes that ``. Supplied by Marketing Consultants for MCB University Press. for our purposes here. VOL. we need only concern ourselves with the distinction between the general and specific answers to the question. . can never answer a specific question such as whether your current customers will stay loyal when the time comes for them to purchase again.) JOURNAL OF PRODUCT & BRAND MANAGEMENT. from a mistaken belief that investment in research removes the risks from marketing decisions. . 9 NO. in general. It doesn't remove those risks nor should we expect it to. (A precis of the article ``Brand and retailer loyalty: past behavior and future  intentions''. there is an observable link between stated intentions (or expectations) and actual purchase behaviour then we can judge that the same should be true about the future. therefore. Any researcher who claims that their research will provide definitive answers for a client should be taken out back and shot. Researchers and research companies could help this process through better communication with their clients about what research does and doesn't do for their business. past behaviour indicates a predisposition to a certain type of behaviour. . At the same time we can say that. If we know from the past that. more specifically. But. There are no right answers and businesses. Business disappointment with research stems. in the round.'' It all seems pretty depressing but you didn't really expect to have a foolproof way of predicting future consumer behaviour.Does what we've done before influence what we will do in the future? Now I appreciate that this is a huge question on which great minds have pondered for years. Market research ± however it's conducted ± does not produce certainty but acts to inform us in the decisions we have to take. therefore. Research. Funny things consumers ± that's what research tells us Consumers (people if you prefer) do not act according to a predictable set of rules. . It is intuitive to observe that what I did yesterday does not necessarily influence what I may do tomorrow. By making this claim the researcher is acting irresponsibly and the result will be a further increase in business cynicism about the value of market research. in the main. Can we really accept. What research does provide is guidance about how consumers might behave at some unspecified point in the future.

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