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THE ASSOCIATION BETWEEN CONSUMER DEMOGRAPHIC CHARACTERISTICS AND SERVICE LOYALTY Paul G.

Patterson and Kriengsin Prasongsukarn The University of New South Wales

Abstract This study hypothesises that loyalty to a service provider varies with three key demographic characteristics (age, sex and occupation). Furthermore, we also examine whether motives for service loyalty (social benefits, special treatment and trust) vary by the same demographic variables. Over 700 interviews were completed across three service industries. The industries selected were based on high versus low interpersonal contact during service delivery, and credence versus experience properties. Results indicate that age and occupation (but not gender) are associated with service loyalty (repurchase intention and behaviour loyalty) across three service types. It was also found that older clients emphasise different motives to stay loyal compared to the younger clients. Management implications for managing loyalty and future research implications of the findings will be discussed.

Introduction There are conflicting views in the literature as to whether consumer demographics are associated with brand loyal behaviour (Gameau and Sharp 1995; Iacobucci and Ostrom 1994; Snyder 1991). In particular, are older consumers more brand loyal than their younger counterparts? This is an important question with the rapid ‘aging’ of the population in many western countries (e.g. the proportion of people in Australia 65 years or older is forecast to increase from around 12% in 2001 to 24.7% in 2050). This phenomenon has generated a growing interest in how this demographic shift will impact consumer behaviour and decision making processes, especially amongst the older cohort (Cole and Balasubramanian 1993; Moschis 1994; Lumpkin and Hunt 1989; Rousseau, Lamson and Roger 1998). Such issues have been examined for fast moving consumer goods (FMCG). In a study of FMCG in the USA, Uncles and Ehrenberg (1990), using panel data, concluded that there was no difference in brand loyalty between younger and older consumers. An Australian study by Roy Morgan Consumer Panel found, over a five-month period, significant brand switching amongst all age groups and across gender. Notwithstanding there is a general belief that (1) older consumers are more conservative and less willing to try new brands; (2) consumers’ values have changed, with the ‘older’ generation being more likely to exhibit loyal behaviour than the younger generation; and (3) reduced mobility in later life restricts brand choice (Gameaus and Sharp 1995; Lumpkin and Hunt 1989). However, to date these propositions have not been examined in a service context. Knowledge of how aging affects consumer behaviour in services will not only enable marketers to better satisfy their customers, but may also allow them to develop stronger interpersonal relationships, and in turn retention strategies (Jones, Mothersbaugh, and Beatty 2000). The purpose of this paper is to empirically examine the extent to which demographic characteristics correlate with service loyalty. Furthermore, we examine whether three motives for service loyalty (social benefits, special treatment and trust - Gwinner et. al, 1997) vary by demographic factors.

1973).. familiarity and even social gossip that flows from being a regular (loyal) service customer – of. or family doctor. social penetration theory and the notion of social support to develop our hypotheses ( ltman and Taylor. sociology and communications. dentist) lend themselves to the development of social bonds between provider and client. In many retirement areas banks offer refreshments and a comfortable air-conditioned lounge. psychological beings and social beings (Moody 1988). personal fitness trainer. It is widely accepted that people ‘age’ as biological beings. As service encounters accumulate over time. Finally. social life is a series of social exchanges that provide a degree of satisfaction. which can inspire pro-social attitudes and behaviours (O’Connor et al. According to exchange theory. In this paper we focus on ‘social’ aging. service ‘production’ and delivery typically involve service encounters that are first and foremost social exchanges. as well as stage in family life cycle (Zeithaml and Gilly 1987). which allows them to grow and mature. dry cleaner. 1999). 1974). as noted by Dychtwald (1990). Ahuvia. being less socially active or even at a point in the family life cycle where people settle down and have children. a hairdresser. each with differing characteristics. They encourage people to visit and take as much time as they like….Unlike the FMCG situation. aging and age related behaviours in later life are multidimensional and have their roots in several disciplines.e. exchange theory and the notion of social support to propose a series of hypotheses relating demographic variables to service loyalty ( delman. hairdresser. In this paper we rely on social interdependence theory. A Ahuvia. and Goodwin 1994). customers receive social support when service providers’ verbal or non-verbal communications achieve at least one of three things: (1) reduces client’s uncertainty. power and prestige (Dowd 1975. Moschis 1994. Many high contact services (e. and Goodwin 1994. a customer and service supplier have the chance to transform these encounters from a mere collection of discrete transactions into a relationship (Czepiel 1990). but deeper. Altman 1973). a need that has been shown to increase with age.288) Loyalty to a service provider is a strategy for risk reduction. Ahuvia and Goodwin 1994) is also relevant to our research purpose. meaningful social relationships (Moschis 1994). say. Finally.” (p. Conceptions of. and explanations for. The psychological needs and dispositions of individuals determine which rewards are salient and thus to whom they will have a relationship (Eketh. We rely on exchange theory.g. 1973). Clients are known to value the recognition. It also allows them to develop greater empathy and concern for the welfare of others. i. Exchange theory is relevant as it attempts to A explain the shrinking social network of people as they age in a realignment of their personal relationships. (2) enhances self-esteem. “For older consumers. Social support has been heavily researched in social psychology. In this realignment. Such social encounters have been shown to satisfy emotional and psychological needs of older consumers (Adelman. As people age they gain more experiences interacting with others. . changes in the nature of social relationships. Broadly speaking. family doctor. older consumers have a tendency to have fewer. The theory seems particularly useful in explaining realignment in role relationships as a result of changes in the number and nature of social relationships associated with retirement. We then empirically test these hypotheses across three service types. (3) creates a sense of social connection to others. the interpersonal experience matters a great deal. Behaviour and Disposition of the Aging Consumer Behaviour in later life is believed to be the outcome of the aging process and accumulated life experiences. The concept of ‘social support’ (Adelman. Altman and Taylor.

hairdresser) than low-medium contact service (travel agent). Ahuvia and Goodwin 1994). Travel agency n = 265. we now develop a series of hypotheses: Our first hypothesis is: H1 : Service loyalty will be positively associated with age across all three-service categories. Hence: H3 (b) : Gender will not be associated with service loyalty. quasi-friendships). found several key motives that drive consumers to forsake the opportunity of sampling alternative service providers. Further. For example. These motives encompassed social benefits (recognition. while the importance of special benefits will be higher among younger clients. This should ensure that any bias is minimised. familiarity. Thus: H3 (a) : Occupation groups will be (weakly) associated with service loyalty. Research Method In phase one. However respondents were recruited from the same region and monitored closely to ensure similar demographic profiles for each sample. Gremler and Bitner (1997) in an empirical study of numerous services. retirees and many professionals are also in the older age categories and thus likely to exhibit a positive correlation with loyalty to services providers. As per the above discussion. 50 minutes with a regular hairdresser (high contact service) lends itself to the development of stronger social bonds and a longer term relationship than does a five minute dealing with a bank teller or travel agent (low-medium contact service). Gwinner. positively associated with age for high contact (doctor. No evidence could be found which suggests loyalty is associated with gender. 10 qualitative interviews were conducted across a range of service types to gain an understanding of the dimensions of perceived relational benefits and motives for loyalty. As discussed above. Situational factors such as convenience of location (for white collar workers and partners with domestic home duties) may predispose home occupational categories to exhibit more loyalty than others (Altman 1973). The final sample comprised of Medical services (GPs) n= 175. we hypothesise: H4 : Social benefits and trust motives will be more important to older age cohorts. some services lend themselves to more intimate. . special treatment benefits (price reductions. Hence: H2 : Service loyalty will be more strongly.older consumers reported to have a lower optimum stimulation level (OLS) and thus have less intrinsic desire to switch service providers (Raju. Based around the foregoing discussion. special deals) and trust that the core service will be more likely to be produced with care and attention if it is for a ‘regular’ customer. Hairdressing n = 279. Ideally. 1980). it would have been preferable if the same respondent had completed all four questionnaires. close and prolonged social contact than others (Adelman. This was followed by a cross sectional survey (using a self administered questionnaire) of three service industries. and remain loyal. however this was simply not possible due to the lengthy instrument used.

449 20. 0 -9 (hairdresser).21 1.41a 7.230 . however only directional support was found in the case of travel agents.023 8.000 . A multi-item scale was used in measuring respondents’ motives to stay loyal.90b 8.80.214 .21 9. Factor analysis using oblique rotation produced similar factor patterns.89a 7.Scale Development Two dependent variables are employed – actual behavioural loyalty and repurchase intentions. To further investigate the differences between the responses to the various combinations of service loyalty and motives the differences between mean scores were analysed using a Scheffe test. Results We used ANOVA and t tests to test each of the hypotheses.91 additional providers. However there was no significant association between gender and loyalty across all three services. Probability of repurchase intention was captured using an 11 point Juster scale with 0 meaning ‘No chance’ to 10 ‘Certain’. All items load highly on the appropriate factors and no item loaded (> 0.351 Sig. special treatment and trust) across the pooled sample.03a 2. we conducted exploratory factor analysis using orthogonal rotation (varimax) for the 17 items.000 . positively associated with age across three services. Behavioural loyalty was captured as the number of services (other than the focal service) used in past 2 years.38a 6.27ab 1.4a 2. Table 1: Behavioural Loyalty and Repurchase Intention By Age Age Groups Doctor Hairdresser Travel Agent Behavio Repurchas Behavio Repurchas Behavio Repurchas ur e ur e ur e Loyalty Intention Loyalty Intention Loyalty Intention 18-24 1.57bc 0. As per Table 1.53a 25-34 1. thus supporting the independence of the constructs and providing evidence of their validity.483 1. Cumulatively. Thus a lower number represents stronger loyalty.504 6.84 1.91b 9. To examine construct validity. For example for medical services >55 years group used an average 0. Answers ranged from 0-6 (doctor). Cronbach’s (1995) alpha for each motive across the three services all exceeded 0. 71% for hairdresser and 67% for travel agent). The behavioural loyalty construct was measured by asking the respondents to indicate the number of different service providers (other than their focal provider) they dealt with in the past 2 years. .72b >55 years 0. repurchase intention was significantly.57ab b a b c a 35-54 1.26a 5.93a 8.42a 0.93.02 1. indicating stronger loyalty among the older group. this supporting H3a.007 0.69b n 175 279 265 F 4. whilst the 1524 year group used 1. and 0-4 (travel agency service).35) on more than one factor.45a 9.000 .91a 7. these three factors explained 68% of the variance for the pooled data (59% for doctor.03 8. confirming the discriminant and convergent validity of the measures (Rummel 1970).07a 1. Three factors emerged (social benefits.04 7. The association between gender and 1 service loyalty was analysed using independent samples t-test. Behavioural loyalty has also shown to be statistically significantly associated with medical and hairdressing services. Hence these findings provided empirical support for H and H2 .

029 .852 8.63 2.32a 4.75 1.18ab 7.37 3.54a 3.56a 4.17 4. sex.71 6.03ab 9.003 Note: Means with different letters are significantly different from each other at p ≤ .68b 9.029 . but the difference is not significant at the p< .901 1.38 1.658 6.35 5.04a 4.781 Sig.36 4.67b 0.05 level for medical services.77b 9.Note: Means with different letters are significantly different from each other at p ≤ . and occupation) with service loyalty (repurchase intention and .26a 7.00ab Home Duties 1.48ab a a a a a Student 1.38b 1.993 6. .150 .19 11. and students (youngest occupational group) exhibit the least loyalty.001 . These findings lend partial support to H4 .95 7. Housewives exhibit high loyalty to their hairdressers.39a 4. Table 3 shows that the importance of social benefits and trust. However in all cases retirees (i.000 .29a 4.598 5.95ab 0. was higher for older clients in hairdresser and travel agent situations. These findings lead to the acceptance of H3b.05 When grouping respondents by their occupation. we found support for all of our hypotheses relating the three demographic characteristics (age.09ab 4.927 4 9 Sig.42a 6.81ab 3.002 . older age groups) exhibit the most loyalty.568 2.000 .000 Note 1: Means with different letters are significantly different from each other at p ≤ .71a 3.92ab 1.31 3.00ab 2.031 .47ab 9. .80b 7.33ab 8..67 9.38c 279 265 14.545 3.05 Note 2: All constructs measured on 5-points rating scales.10a 25-34 4.929 .99b 4.23ab 0.73b 8.49a 2. Interestingly the patterns differ somewhat across service types.48b n 175 F .562 3.42b 0.59ab 4.78a 4.442 .19ab a a a b 35-54 3.05ab 7.299 Travel Agent Trust Social Special Trust Benef Treatme it nt 3.03bc 3.58a 3.07a 4.51a 4.92 4.62a 4.16a 3.642 5.05 Table 3: Motives for Loyalty By Age Age Groups Doctor Hairdresser Social Special Trust Social Special Benef Treatme Benefit Treatme it nt nt 18-24 3.22b n 175 279 265 F 2.75 8.96a c bc 4.178 .49b > 55 years 4.22ab ab b ab b b Tradesman 1.32 2.000 .43ab 2.68a Retired 0. a significant association (using one way ANOVA) exists between occupation and both repurchase intention and behavioural loyalty (refer Table 2).82c 4.42 0.95 4.48a 3.20a 3. Table 2: Behavioural Loyalty and Repurchase Intention By Occupation Profession Doctor Hairdresser Travel Agent Behavio Repurchas Behavio Repurchas Behavio Repurchas ur e ur e ur e Loyalty Intention Loyalty Intention Loyalty Intention Professional 1.97a 4.63ab Office worker 1. as well as special treatment. with 1 = Not at all important and 5 = Very important In conclusion.04b 4.000 .00 9.e.000 .73b 8.

special treatments. and trust) to service loyalty. Implications Due to space limitations these will be discussed at the ANZMAC conference.behaviour loyalty). However. . we found only partial support when relation loyalty motives (social benefit.

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