Journal of Business & Industrial Marketing

The effects of goods-related and service-related B2B brand images on customer loyalty
Fabio Cassia, Nicola Cobelli, Marta Ugolini,
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To cite this document:
Fabio Cassia, Nicola Cobelli, Marta Ugolini, (2017) "The effects of goods-related and service-related B2B brand images on
customer loyalty", Journal of Business & Industrial Marketing, Vol. 32 Issue: 5, doi: 10.1108/JBIM-05-2016-0095
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 The effects of goods-related and service-related B2B brand images on customer
loyalty

Purpose
Previous research has shown that business-to-business (B2B) brand image has positive effects on
customer loyalty. However, the results have been inconsistent because they have highlighted that
B2B brand image has either direct or mediated effects on loyalty. Drawing on the framework of
service transition, this study develops and tests a model that reconciles previous findings. This
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model suggests that goods-related and service-related B2B brand images coexist in customers’
perceptions and impact customer loyalty in different ways.

Design/methodology/approach
A model was developed and estimated using covariance-based structural equation modeling. The
data used in the analysis were collected through a survey in the Italian healthcare industry, focusing
on the relationship between hearing aid manufacturers and audiologists.

Findings
Both goods-related and service-related B2B brand images have positive effects on loyalty.
However, while the effects of goods-related image on loyalty are fully mediated by satisfaction,
service-related image has both direct and mediated effects on loyalty.

Research limitations/implications
This study reconciles previous work arguing that B2B brand image has either direct or mediated
effects on loyalty by focusing on the transition from a goods-oriented logic for branding to service
branding. In particular, the analysis focuses on the role of the brand in the co-creation process,
suggesting that a service-related brand image reflects the value unfolding over time through co-
created experiences. However, additional research needs to be conducted in other industries before
the results can be generalized.

Practical implications
The findings provide managers with insights for the co-creation of their B2B brand images. In
particular, the results urge managers to integrate the traditional goods-oriented approach to branding

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 with service branding, showing that enriching B2B brand image with service-related aspects will
have a direct and positive effect on loyalty. However, brand image cannot be created or changed
unilaterally by the firm as it is determined by the customer based on co-creation experiences.

Originality/value
This is the first study to explicitly and separately consider the effects of goods-related and service-
related aspects of B2B brand image on loyalty. It also one of the first studies to apply service logic
to B2B branding issues.
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Keywords: business-to-business, brand image, service logic, service branding, service transition,
loyalty.

Paper type: research paper

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 The effects of goods-related and service-related B2B brand images on customer
loyalty

1. Introduction
The growing body of research on business-to-business (B2B) branding has extensively
demonstrated the benefits that industrial firms may gain from strong brands (Keränen et al., 2012;
Leek and Christodoulides, 2011; Seyedghorban et al., 2016). In particular, several studies have
suggested and documented that B2B brand image has positive effects on customer loyalty (Cassia
and Magno, 2012; Hirvonen et al., 2016; Juntunen et al., 2011; Persson, 2010; Van Riel et al.,
2005). However, findings on this issue are inconsistent, as they suggest that brand image has either
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direct (Taylor et al., 2004) or mediated effects (Kim and Hyun, 2011) on loyalty in B2B contexts.
In addition, compared to similar research conducted in the business-to-consumer (B2C) domain,
these results are quite surprising. In fact, studies on B2C branding have concluded that brand image
has an indirect effect on customer loyalty (e.g., Bloemer and De Ruyter, 1998; Brodie et al., 2009).
A clear view on the direct and mediated effects of B2B brand image would be important to assist
firms designing their brand activities to gain customer loyalty. In addition, it would offer a pivotal
contribution to understanding the brand formation process in B2B markets (Ballantyne and Aitken,
2007; Lipiäinen and Karjaluoto, 2015).
This study suggests that the ongoing transition toward the new service logic (Vargo and Lusch,
2004; Vargo and Lusch, 2008; Vargo and Lusch, 2016a) offers the opportunity to reconcile
previous findings of either direct or mediated effects of brand image on loyalty in B2B. While
traditional goods-oriented logic maintains that value is created by the supplier and then delivered to
the customer, service logic argues that value is always co-created through interactions between the
supplier and the customer (Storbacka et al., 2016; Vargo and Lusch, 2016a; Vargo and Lusch,
2016b). Similarly, branding research has highlighted how the traditional goods-oriented view of
branding is evolving to a new perspective known as service branding (Brodie, 2009; Brodie et al.,
2006; Brodie et al., 2009; Payne et al., 2009). Under the traditional goods-oriented view, brand
value is created by the supplier and it is embedded in the goods that are offered to the customers
(Merz et al., 2009). According to the new service logic, the brand value is dynamically co-created
by the two actors. Hence, the focus is on the process of co-creating the brand value by designing
and managing the relationship experiences (Merz et al., 2009; Payne et al., 2009). This transition is
particularly evident in B2B markets, where, by definition, the actors take part in mutual value co-
creation (Vargo and Lusch, 2011).

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 Drawing on the distinction between goods-oriented and service-oriented brand logics (Merz et al.,
2009), this research suggests a model that separately considers the effects of goods-related and
service-related B2B brand images on loyalty. As previous research on firms transitioning from
goods to service has shown (Gummesson, 2014; Jacob and Ulaga, 2008; Kindström and
Kowalkowski, 2014; Ulaga and Loveland, 2014), the adoption of a service perspective by firms is a
gradual process (Greer et al., 2016). Many industrial suppliers currently pursue parallel goods-
oriented and service-oriented business models to serve different customers or the same customers in
different purchasing contexts (Kowalkowski et al., 2015). Furthermore, customers may have
different perceptions about the same brand (Gomes et al., 2016; Mudambi, 2002), as they form a
brand image in their minds as a result of their unique experiences (Ballantyne and Aitken, 2007;
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Lipiäinen and Karjaluoto, 2015). Hence, it is suggested that goods-related and service-related B2B
brand images coexist in customers’ perceptions. However, no study has considered the distinct roles
of goods-related and service-related brand images and their effects on customer loyalty.
In the model suggested by this study, satisfaction mediates the effects of both goods-related and
service-related brand images on loyalty. Moreover, a service-related brand image has additional
direct effects on loyalty. Specifically, a service-related brand image is hypothesized to be able to
communicate brand meanings that arise from the co-creation experiences that are not embedded in
goods. Interestingly, the available literature on B2B brand image offers some clues that seem to be
consistent with these suggested effects. In fact, direct effects were mainly found for B2B services
(e.g., Juntunen et al., 2011) while mediated effects emerged for both B2B goods and B2B services
(e.g., Cretu and Brodie, 2007; Kim and Hyun, 2011), with satisfaction (in the overall quality) as the
mediator.
The suggested model has been tested through an empirical analysis conducted in the Italian
healthcare industry and focused on the relationship between hearing aid manufacturers and
audiologists operating as entrepreneurs in the Italian hearing aid retailing industry. Several hearing
aid manufacturers have recently expanded their offerings; in addition to providing goods, they also
offer a wide range of services. Thus, this context is particularly suitable for this research.
The results of this study will both advance theoretical knowledge about B2B branding and provide
managers with actionable insights. In relation to theory advancement, the findings will reconcile
previous results about the effects of B2B brand image and also enrich our understanding of the
service logic applied to branding, which is still at an early stage (Gyrd-Jones and Kornum, 2013). In
addition, this paper addresses the current priorities in B2B branding research (Seyedghorban et al.,
2016) by providing evidence of the effects of brands with different perceived images. In relation to
managerial implications, the findings will assist firms, especially those pursuing service-led growth

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 strategies, to design their positioning efforts (Jalkala and Keränen, 2014) and co-create effective
brand images for their B2B brands. Previous research has shown managers that brand orientation is
essential to high brand performance (Baumgarth, 2010; Reijonen et al., 2015; Zhang et al., 2016).
This study will show that the effects of B2B brand efforts also depend on the goods-oriented and
service-oriented perceived aspects of a brand.
The remainder of the paper is organized as follows. First, the theoretical background of the research
is introduced, and the research model is developed. Next, the method is explained, and the results
are presented. Finally, the theoretical and the managerial implications of the results are discussed,
the limitations of this study are highlighted and opportunities for future research are suggested.
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2. Background
After four decades of research, the importance of branding in B2B markets has been largely
assessed (Seyedghorban et al., 2016). In-depth research has been conducted on the determinants of
brand relevance in B2B contexts, including purchase importance, purchase complexity and risk
(Brown et al., 2012; Brown et al., 2011; Gomes et al., 2016; Leek and Christodoulides, 2011;
Zablah et al., 2010), the supplier selection process (Blombäck and Axelsson, 2007; Leek and
Christodoulides, 2011), characteristics of buyers and decision-making units (Alexander et al., 2009;
Bendixen et al., 2004; Ferguson et al., 2017; Gomes et al., 2016; Mudambi, 2002) and product
categories (Backhaus et al., 2011). Overall, these studies have shown the effectiveness of branding
in attracting and retaining loyal B2B customers (Keränen et al., 2012) and its positive effects on a
firm’s general competitive (Hirvonen et al., 2016; Reijonen et al., 2015) and financial (Homburg et
al., 2010; Merrilees et al., 2011; Simoes et al., 2015) performance. Hence, previous research has
suggested that firms operating in B2B markets should consider investing in branding (Kotler and
Pfoertsch, 2007).
However, despite a few exceptions (Cassia et al., 2015; Glynn, 2012; Kalafatis et al., 2014;
Vallaster and Lindgreen, 2011), research on B2B brand management and brand strategies remains
incomplete. This gap is related to the very limited knowledge about the processes through which
B2B brand value and image emerge (Lipiäinen and Karjaluoto, 2015). New service logic has
recently begun to enhance this understanding. Service logic argues that, differently from the
traditional goods-oriented logic, value is not created by the supplier and then sold to the customer
(Vargo and Lusch, 2016a). Rather, value is always co-created by the supplier and the customer and
is uniquely and dynamically determined by the customer (Vargo and Lusch, 2008). In summary,
this logic moves the focus from the output (goods) to the process of mutual value creation. In fact,
value arises from reciprocal, service-for-service exchanges (Vargo, 2009). Therefore, measures of

5
 short-term output alone, such as customer satisfaction, are not sufficient for explaining customer
loyalty over time (Akaka and Vargo, 2015; Vargo, 2009).
In conjunction with this evolution, branding scholars have argued that brands are not resources
produced by the supplier that are embedded in the products sold to the customers (Merz et al.,
2009). Brand value and brand meanings are always co-created and emerge over time (Merz et al.,
2009) and can only be partially influenced by the supplier’s marketing communications (Brodie et
al., 2009). The brand has a pivotal role to play in realizing the experiences that drive value co-
creation (Brodie et al., 2009). Specifically, the brand is the relationship experience itself (Payne et
al., 2009; Prahalad and Ramaswamy, 2004).
Research on service branding logic is still limited (Gyrd-Jones and Kornum, 2013). In particular, its
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application to B2B settings deserves much more attention considering the well-established
importance that actors’ interactivity and value co-creation have in these contexts (Vargo, 2009). In
this study, we maintain that the logic of service branding provides insights that can reconcile
previous findings of either the direct or mediated effect of B2B brand image on customer loyalty.
However, to date, B2B branding research has only noted that branding B2B services is different
from branding B2B goods (Coleman et al., 2011; Davis et al., 2008; Geigenmüller and Bettis-
Outland, 2012; Rauyruen et al., 2009). This distinction becomes blurred when considering that
many industrial suppliers have begun to pursue service-led growth strategies, offering services and
solutions in addition to the traditional provision of goods (Baines et al., 2009; Gebauer et al., 2005;
Kindström, 2010; Kindström and Kowalkowski, 2014; Ulaga and Loveland, 2014; Ulaga and
Reinartz, 2011). These suppliers generally implement service expansions to simultaneously provide
goods, services and solutions (Kowalkowski et al., 2015). Thus, their brand images contain both
goods-related and service-related aspects. Understanding how customers perceive and react to their
suppliers’ service-related and goods-related B2B brand images is fundamental if effective branding
strategies are to be designed.
Based on the above framework, it is suggested that goods-related and service-related aspects coexist
in perceived brand image. In the next section, a model is developed that addresses the different
effects of goods-related and service-related B2B brand images on customer loyalty (see Figure 1).

3. Hypotheses development
A brand image refers to the perceptions of organizations that customers hold in their minds (Keller,
1993). Goods-related B2B brand image refers to the brand image of a supplier as a supplier of
tangible goods (Raddats and Easingwood, 2010; Vargo and Lusch, 2008). Therefore, high levels of
goods quality, reliability and performance will enhance the goods-related brand image (Michell et

6
 al., 2001). Conversely, service-related brand image refers to the brand image of a supplier as a
provider of services that facilitate the value creation process of customers (Powers et al., 2016;
Vargo and Lusch, 2008). Thus, the provision of valuable and timely support services aimed at
improving customers’ performance will enhance the service-related brand image (Kuhn et al.,
2008).
The next section develops hypotheses regarding the indirect and direct effects of goods-related and
service-related B2B brand images on loyalty.

3.1 Indirect effects

There is extensive evidence that B2B brand image has a positive indirect effect on customer loyalty
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through overall satisfaction with the offering (Biedenbach and Marell, 2009; Elsäßer and Wirtz,
2017; Kim and Hyun, 2011). The rationale for this effect is that a brand image creates a halo effect
on customer satisfaction that, in turn, affects loyalty (Lai et al., 2009). Additionally, many studies
have shown that there is a strong relationship between the brand image and satisfaction (Roper and
Davies, 2010; Taylor and Hunter, 2003). Furthermore, other studies have reported that there is a
strong relationship between satisfaction and customer loyalty in B2B contexts (Baumgarth, 2008;
Bennett et al., 2005; Biedenbach et al., 2015; Glynn, 2010; Grant et al., 2014; Han and Sung, 2008;
Russell-Bennett et al., 2007). Drawing on this previous research, in this study, we hypothesize the
existence of indirect effects of B2B brand image on loyalty with satisfaction as the mediator. In
addition, we posit that both goods-related and service-related B2B brand images exert such indirect
effects on loyalty. Indeed, these effects have been found in relation to both B2B goods providers
(e.g., Cretu and Brodie, 2007) and B2B services providers (e.g., Biedenbach and Marell, 2009).
Thus, we can expect that these effects will extend to both goods-related and service-related B2B
brand images.

3.2 Direct effects

A number of studies have shown that B2B brand image has direct, positive effects on loyalty
(Juntunen et al., 2011; Taylor et al., 2004; Taylor and Hunter, 2003); however, other research has
found mediated rather than direct effects (Kim and Hyun, 2011). The model in this study addresses
these inconsistencies and contends that, in addition to the indirect effects described above, service-
related B2B brand image will have direct effects on brand loyalty. This statement is based on
previous research on the effects of attribute-based associations (i.e., goods-related associations,
such as the perceived overall quality of the product) and non-attribute-based associations (i.e.,
service-related associations) of brand-image (Batra and Ahtola, 1991; Batra and Homer, 2004;

7
 Homer, 2008). Findings from these studies showed that non-attribute-based associations have direct
effects on customer affective reactions, including loyalty intentions, while attribute-based brand
associations have only indirect effects, produced through more elaborated, cognition-based
mechanisms (Edwards, 1990; Fabrigar and Petty, 1999). Drawing on this theoretical framework,
previous research in B2B branding has suggested and shown that non-attribute-based brand-image
associations have a direct effect on a buyer’s loyalty (Cassia and Magno, 2012).
Thus, this study posits that service-related B2B brand image also has direct effects on loyalty, while
goods-related brand image does not. The transition from the goods-oriented to the service-oriented
logic provides a rationale for this effect. Considering the traditional goods-dominant logic, brand is
embedded in the goods that are sold through discrete transactions to deliver satisfaction (Merz et
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al., 2009). Consistent with this perspective, goods-related brand image has a direct effect on
customer satisfaction, which, in turn, is directly related to customer loyalty (Vargo, 2009).
According to service logic, value is co-created, and brand meanings emerge from the co-creation
experiences (Brodie et al., 2009). Hence, service-related brand image comprises those brand
meanings that result from the co-creation experiences. Moreover, according to the value co-creation
perspective, customer satisfaction is not sufficient for explaining customer loyalty (Akaka and
Vargo, 2015). Based on this reasoning, we suggest that the co-creation experiences also have a
direct emotional link to customer loyalty.
Therefore, we suggest the following hypotheses:

H1: Goods-related brand image has a positive effect on customer loyalty, and this effect is fully
mediated by satisfaction.

H2: Service-related brand image has a positive effect on customer loyalty, and this effect is partially
mediated by satisfaction.

4. Methods
To test these hypotheses, a questionnaire-based survey was conducted in the Italian health-care
industry that focused on the relationship between hearing aid manufacturers and audiologists.
Audiologists purchase hearing aids from hearing aid manufacturers and then use their expertise to
fit the hearing aids properly to address their end users’ hearing problems. Under Italian law,
audiologists are both healthcare professionals and product resellers. Most audiologists work in
small community-based private practices and have non-exclusive agreements with a number of
hearing aid manufacturers. The competition among hearing aid manufacturers is intense, and some

8
 of the manufacturers have recently expanded their offerings; in addition to providing hearing aids,
they offer a variety of services to audiologists (Cobelli et al., 2014). Currently, manufacturers may
provide audiologists with a number of services, including timely support to solve end users’ specific
problems, technical training, assistance in implementing and managing Customer Relationship
Management (CRM) programs, effective return management and information technology (IT)
services (e.g., support in the creation of the customer’s website). Therefore, this industry is
characterized by an ongoing expansion from goods to services and was thus deemed suitable for
this research.
Four hundred audiologists belonging to the Italian Audiologists Association and operating as
entrepreneurs in the Italian hearing aid industry were identified. The inclusion criteria consisted of
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ownership of a hearing aid retail business and the freedom to select hearing aid suppliers. Each
audiologist was sent an email with a link to an online questionnaire and a presentation detailing the
aims of the study. The questionnaire comprised multi-item measures for all constructs. As
audiologists may purchase hearing aids from multiple manufacturers, the participants were asked to
refer only to their key supplier when completing the questionnaire. Items were carefully selected
and evaluated to ensure that they captured the intended theoretical constructs. Three items were
used to measure the goods-related brand image and two items were used to measure the service-
related brand image (see Table II). These items were adapted from previous measures of B2B brand
image (Davis et al., 2008; Juntunen et al., 2011). Specifically, the goods-related brand image
registered aspects strictly related to the quality and performance of the tangible products, i.e., the
hearing aids. The service-related brand image measured the supplier’s support of customers in the
value creation process. Three items from Jap (2001) and two items from Palmatier et al. (2007)
were used to measure satisfaction and loyalty, respectively. In particular, satisfaction measured the
perceived outcomes of the collaboration. One of the authors of this study has professional
experience in the hearing aid industry and provided useful insights for the selection of the items.
Moreover, one manager from a hearing aid manufacturer and two audiologists were involved in the
process of adapting the items to the specific research setting and testing the questionnaire. All items
were measured on seven-point Likert scales.
The questionnaire also included several other questions regarding the participants’ profiles (e.g.,
firm revenue, firm age, the number of years the audiologist had operated in the industry, the name
of the audiologist’s key supplier and the percentage of hearing aids purchased from the key
supplier).
One hundred and forty-two usable answers were obtained from the participants (i.e., a response rate
of 35.5%). The absence of non-response bias was assessed by comparing early and late respondents

9
 on several variables via χ2 tests and t-tests (Armstrong and Overton, 1977). Table I provides the
profile of participants and their firms. The majority of the participants had extensive experience as
audiologists, and most of their firms had yearly revenues of up to €1,000,000. Furthermore, 85.9%
of the participants purchased more than 50% of their hearing aids from one key supplier. The
normality, linearity, and homoscedasticity were also assessed to ensure that these assumptions had
been met (Kline, 2011). Covariance-based structural equation modeling was then used to estimate
the measurement model and structural model (Hair et al., 2011).

(Insert Table I about here)

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5. Findings
A confirmatory factor analysis was used to evaluate the measurement model (CFA) (see Table II).
The overall goodness of fit was satisfactory (Bagozzi and Yi, 2012) with χ2 = 37.24, df = 29
(p > 0.10); χ2/df = 1.28; CFI = 0.98; RMSEA = 0.04, pclose > 0.10; and SRMR = 0.04. All
standardized factor loadings were higher than 0.70 except for one loading that was equal to 0.62.
Furthermore, for each latent construct, the average variance extracted (AVE) was higher than 0.50,
Cronbach’s alpha coefficient was greater than 0.70, and the composite reliability was beyond 0.70.
Thus, both reliability and convergent validity were reached (Fornell and Larcker, 1981).
In addition, the AVE for each latent construct was higher than the construct’s highest squared
correlation with any other construct. Thus, discriminant validity was also met (Fornell and Larcker,
1981).

(Insert Table II about here)

After assessing the validity of the measurement model, the structural model was estimated. The
results (see Table III and Figure 1) indicated a good model fit. Specifically, χ2 was 37.24 with
df = 29 and non-significant (p > 0.10), indicating that the estimated variance-covariance matrix
reproduced the sample variance-covariance matrix. The value of χ2/df was 1.28 and thus below the
threshold of three (Kline, 2011). CFI and GFI were 0.98 and 0.95, respectively, and above the
cutoff of 0.93 (Bagozzi and Yi, 2012). Moreover, the RMSEA was 0.04 (pclose > 0.10) and SRMR
was 0.04, which were below the threshold of 0.07 (Bagozzi and Yi, 2012).
In regards to the structural effects, the findings supported Hypothesis 1; that is, the goods-related
brand image had a positive effect on customer loyalty, and this effect was fully mediated by

10
 satisfaction. Specifically, the data showed that the goods-related brand image had a positive effect
on satisfaction (β = 0.562, p < 0.01), and this, in turn, had a positive effect on loyalty (β = 0.476,
p < 0.01). A Sobel test was also used to test the significance of the indirect effect of the goods-
related brand image on customer loyalty. The analysis confirmed the significance of this effect,
showing a value of 2.75 (p < 0.01), which is higher than the cutoff of 1.96 (Sobel, 1987).
Additionally, the goods-related brand image had no direct effect on loyalty (β = -0.190, p > 0.10). A
χ2 difference test was also performed between the models with and without the direct effect and
showed that adding the direct effect did not significantly improve the model fit (∆χ2(1)=2.58,
p>0.10).
The results also supported Hypothesis 2; that is, the service-related brand image had a positive
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effect on customer loyalty, and this effect was partially mediated by satisfaction. The analysis
showed that the service-related brand image had a positive effect on satisfaction (β = 0.330,
p < 0.01), and this, in turn, had a positive effect on loyalty (β=0.476, p<0.01). The Sobel test
confirmed the significance of the indirect effect of the service-related brand image on loyalty with a
value of 2.34 (Sobel, 1987). Furthermore, the χ2 difference indicated that the addition of the direct
effect between the service-related brand image and loyalty significantly improved the model fit
(∆χ2(1) = 22.79, p < 0.01). Thus, the service-related aspects of the brand image had both direct and
mediated effects on loyalty.
Five control variables (i.e., firm revenue, firm age, the number of years the audiologist had operated
in the industry, the name of the key supplier, and the percentage of hearing aids purchased from the
key supplier) were also included, but none had significant effects.

(Insert Table III about here)

(Insert Figure 1 about here)

Overall, these results provide for the first time evidence that a B2B brand image simultaneously has
both direct and mediated effects on customer loyalty. Specifically, the findings show that the effects
of the brand image follow different pathways depending on the aspects of the brand image that are
under consideration, i.e., goods-related or service-related aspects. The goods-related brand image
has only an indirect effect on loyalty through satisfaction. This result implies that a supplier’s brand
image related to output quality and performance is one of the drivers contributing to customer
overall satisfaction but has no immediate effect on loyalty. The service-related brand image has
partially-mediated effects on loyalty. This finding implies that a supplier’s brand image related to

11
 its ability to serve and support the customer’s value creation process has direct impact on loyalty. In
addition, the results support the argument that a service-based image has an additional indirect
effect on loyalty through a halo effect on overall satisfaction. These findings and their implications
will be discussed in the next section.

6. Discussion

6.1 Theoretical implications

This study reconciles previous analyses that reported either direct (e.g., Juntunen et al., 2011) or
mediated (e.g., Cretu and Brodie, 2007; Kim and Hyun, 2011) effects of B2B brand image on
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loyalty. The results show that B2B brand image has both direct and mediated effects and that the
aspects of the brand image under consideration explained the previous inconsistent results.
Considering only the goods-related brand image, a fully mediated effect on loyalty was registered;
however, when both goods-related and service-related brand images were considered, both direct
and mediated effects emerged. The theoretical implications of these findings should be interpreted
in light of the available knowledge about service transition and service branding (Brodie et al.,
2009; Merz et al., 2009; Payne et al., 2009). According to this perspective, value is always co-
created, and brand experiences are central to this co-creation process. Therefore, a supplier’s brand
image emerges from the interactions experienced by the customer (Mandelli, 2012). Drawing on
this reasoning, we suggest that service-related brand image reflects the value unfolding over time
through the co-created experiences. Hence, a positive service-related brand image implies that the
customer perceives that the supplier is “serving” the customer by engaging in the co-creation
experiences. Loyalty is a direct consequence of this perception and is not linked to the discrete
exchange of goods.
At the same time, our results show that the brand image also has indirect effects on loyalty. A
goods-based brand image, i.e., customer evaluation of a supplier as a supplier of tangible goods,
leads to satisfaction that, in turn, enhances loyalty. This result is consistent with the traditional
goods-oriented logic, which argues that the brand image is not co-created but delivered to
customers through goods. These findings are not surprising as several studies have concluded that
the transition to the service logic is gradual both at the conceptual (Greer et al., 2016) and practical
(Helm and Özergin, 2015) levels and that the goods-oriented and the service-oriented brand logics
may co-exist for some time (Merz et al., 2009).
Moreover, our analysis reveals that the service-related brand image has also an impact on loyalty
through satisfaction. This finding may be interpreted as a result of the halo effect of the service-

12
 related brand image on satisfaction (Lai et al., 2009). In other words, the perception that the
supplier engages in value co-creation for the customer’s well-being (Vargo, 2009) may also
improve overall customer satisfaction.
Overall, these findings enhance knowledge about B2B branding processes (e.g., Xie and Haugland,
2016) by establishing new relationships between research about B2B branding (Keränen et al.,
2012; Leek and Christodoulides, 2011; Seyedghorban et al., 2016) and service transition (Jacob and
Ulaga, 2008; Kindström and Kowalkowski, 2014; Ulaga and Loveland, 2014). In particular, this
study reveals that the effects of the B2B brand image on loyalty are underestimated when they are
examined only through a goods-oriented perspective. This logic should be integrated with the
service-oriented view of branding, which has received very limited attention in the B2B contexts.
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The need for this evolution is urgent given the increasing number of industrial suppliers following
service-led growth strategies (Kowalkowski et al., 2015).
By integrating service logic into the research on B2B branding, this study offers additional
theoretical implications. In fact, the results address one of the research priorities in B2B branding
that emerged from Seyedghorban et al.’s (2016) recent analysis of the literature. Seyedghorban et
al. (2015) noted the need for research on solution branding. Solution offerings come from the
integration of goods and services and require intense co-creation efforts and frequent interactions
between the supplier and the customer (Jalkala and Keränen, 2014). Therefore, in these
circumstances, the brand plays a pivotal role in the co-creation of experiences. The results of our
study open up research directions in this field, suggesting that the formation of solution brands can
be understood through the lens of service logic.

6.2 Managerial implications

The results of this study provide managers with several insights on managing their B2B brand
image. First of all, our findings suggest that the brand image is not created unilaterally by the firm
but is rather built in customers’ minds. Hence, a firm can influence the formation of brand image
directly through interactions with the customer and indirectly through its marketing
communications. This study suggests that brand image is formed interactively over time and that
one-time brand-building activities are destined to yield poor performance.
Moreover, these findings urge managers to integrate the traditional good-oriented approach to
branding with the new service branding. The traditional approach focuses on branding the output
because goods-related brand image has positive effects on customer satisfaction and, indirectly, on
customer loyalty. The new service logic shows that service-related brand image has additional and
direct effects on customer loyalty. The formation of service-related brand image occurs when the

13
 customers perceive that the supplier is “serving” them, i.e., it is supporting them in the value-
creation process, for example engaging in the co-creation of solutions to specific problems
experienced by the customers. This service-based brand image is directly related to customer
loyalty. Therefore, suppliers should take care of serving their customers. In fact, regardless of the
tangible or intangible nature of their output, all businesses are services business and thus derive
benefit from enriching their brands with service-related associations.
In addition, when defining the positioning strategies for their B2B brands (Jalkala and Keränen,
2014), managers should note that goods-related and service-related images are not mutually
exclusive. A goods-related image is a strong driver of satisfaction; however, a service-related image
stimulates a customer’s emotional commitment and increases loyalty. Customers will perceive a
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supplier with a strong service-related image as a partner who wishes to enhance their performance;
for example, audiologists appreciated the services provided by hearing aid manufacturers who
supported them in attracting and managing customers and fitting hearing aids effectively.

6.3 Limitations and research directions

Several limitations should be considered when interpreting these results. First, data were collected
from only one industry. Thus, evidence from other industries is required before the results can be
generalized. Furthermore, the model was kept as simple as possible to focus on the direct and
mediated effects of the brand image on loyalty. Future studies should develop the model by
considering other variables and effects, such as the moderating effect of buyers’ experiences already
found in previous studies regarding brand image and loyalty. Additionally, it would be interesting
to investigate how goods-related and service-related aspects of B2B brand image affect loyalty in
circumstances where there is a service or product failure (Magno et al., 2017). Finally, this study
examined the effects of goods-related and service-related aspects from only a cross-sectional,
dyadic perspective. Future research should pursue a longitudinal approach to better understand the
formation of a brand image and its effect on loyalty considering that a brand image is co-created not
only by the supplier and the customer but also by other stakeholders (Gyrd-Jones and Kornum,
2013).

14
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About the author

Fabio Cassia, Ph.D. in Marketing, Assistant Professor, Department of Business Administration,

University of Verona, Italy. His research interests are related to business-to-business marketing and
branding, services marketing, international business.

Nicola Cobelli, PhD in Business Administration and Company Direction, Lecturer, Department of
Business Administration, University of Verona, Italy. His research interests are related to service
management in the health care industries.
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Marta Ugolini, Ph.D. in Business Administration, Full Professor of Management, Department of

Business Administration, University of Verona, Italy. Her research interests are related to
service marketing and management, especially in the tourism and health care industries.

20
 Table I – Descriptive statistics of the sample

Characteristics Frequencies (n = 142)

Revenues
< €50,000 4 (2.8%)
€50,000–€100,000 8 (5.6%)
€100,001–€200,000 26 (18.3%)
€200,001–€500,000 39 (27.5%)
€500,001–€1,000,000 52 (36.7%)
€1,000,001–€2,000,000 10 (7.0%)
€2,000,001–€3,000,000 2 (1.4%)
> €3,000,000 1 (0.7%)
Firm age
< 5 years 10 (7.0%)
5–15 years 29 (20.4%)
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16–25 years 84 (59.2%)

> 25 years 19 (13.4%)
Audiologist experience
< 5 years 1 (0.7%)
5–15 years 38 (26.7%)
16–25 years 65 (45.8%)
26–35 years 35 (24.7%)
> 35 years 3 (2.1%)
Key supplier
Bernafon 28 (19.7%)
GNResound 5 (3.5%)
Oticon 24 (16.9%)
Phonak 65 (45.8%)
Starkey 16 (11.3%)
Others 4 (2.8%)
Percentage of purchase from key supplier
< 50% 20 (14,1%)
50–60% 24 (16.9%)
61–70% 23 (16.2%)
71–80% 47 (33.1%)
81–90% 18 (12.7%)
> 90% 10 (7.0%)
 Table II – The measurement model
Factor
Construct Item Mean S.D. C.R.
Loading
[Brand X] is a supplier of:
Goods-based
Good1 – High-quality products 5.76 0.99 / 0.70
brand image
Good2 – Products that perform reliably over time 5.83 1.07 7.45 0.83
(AVE: 0.65; C.R. 0.79;
Cronbach’s α: 0.75) Good3 – A broad product range meeting all
5.12 1.66 6.99 0.70
customers’ needs
[Brand X] is a provider of:
Service-based
Serv1 – Useful services to support the
brand image 3.28 1.53 / 0.77
audiologist’s activity
(AVE: 0.55; C.R.: 0.78;
Serv2 – Timely support services for the
Cronbach’s α: 0.79) 3.70 1.49 6.91 0.85
audiologist
Sat1 – Our collaboration with [brand X] has been
4.26 1.38 / 0.62
a successful one
Satisfaction
Sat2 – Our collaboration with [brand X] has more
(AVE: 0.57; C.R.: 0.79; 5.12 1.11 6.97 0.80
than fulfilled our expectation
Cronbach’s α: 0.77)
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Sat3 – We are satisfied with the outcomes from

5.11 1.18 7.07 0.83
this collaboration
Loyal1 – For my next purchases, I will consider
Loyalty 4.97 1.30 / 0.77
[brand X] as my first choice
(AVE: 0.60; C.R.: 0.75;
Loyal2 – I will do more business with [brand X]
Cronbach’s α: 0.74) 3.44 1.67 7.48 0.79
in the next few years than I do right now
 Table III – The structural model
Unst. Coeff. SE Std. Coeff.
Structural effects
Goods-related brand image
satisfaction 0.688** 0.151 0.562
Service-related brand image
satisfaction 0.239** 0.075 0.330
Satisfaction
loyalty 0.565** 0.163 0.476
Goods-related brand image
loyalty -0.276 0.174 -0.190
Service-related brand image
loyalty 0.460** 0.098 0.535
Model fit
χ2 37.24, df = 29, p > 0.10
RMSEA 0.04 [0.00–0.08], pclose > 0.10
CFI 0.98
GFI 0.95
SRMR 0.04
* *p < 0.01.
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Downloaded by University of Newcastle At 04:26 16 April 2017 (PT)

Figure 1—The structural model