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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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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. Ewing
Senior Lecturer in Marketing, School of Marketing, Curtin University of Technology, Perth, Western Australia Keywords Brand loyalty, Retailing, Consumer behaviour, 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, as well as willingness to recommend the purchased brand and retailer from which it was purchased. Findings indicate that while not without its flaws, purchase expectations/intentions data remain a valid research metric. Furthermore, it would appear as if the brand/consumer interface offers greater predictive ability than the retail/consumer interface. Lastly, willingness to recommend does not seem to be influenced by past behavior, but the higher the respondent's expectation to purchase a brand, the higher will be their willingness to recommend that brand. The same applies to retailer recommendation. Limitations are discussed, and directions for future research suggested.

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, 1995). On that decision, whether to remain loyal to the previously purchased make or switch brands hangs the fortune of automobile manufacturers and retailers. In the past, manufacturers sought to drive new vehicle sales by converting owners of competing brands. More recently, the emphasis has shifted towards retaining existing customers. Quality products, 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, 1991). Observed behavior differs from planned behavior The measurement of purchase intentions has been pervasive in modern marketing. Market research firms often use purchase intentions to forecast new products' sales potential, for example. However, Bemmaor (1995) questions the predictive ability of purchase intentions data, given that in many cases, individual-level observed behavior differs from planned behavior (i.e. intentions). Apparently, purchase intentions are not always accurate predictors of subsequent purchase behavior (see for example Juster, 1966). In addition, individual-level discrepancies do not often resolve at the aggregate level, which results in a bias between mean stated purchase intent (or proportion of intenders) and subsequent proportion of buyers (Bemmaor, 1995). When an individual is unclear about his or her intentions with respect to some act, there is a strong case for independent effects of past frequency on reported intention to try (Bagozzi and Yi, 1989), 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). Here, 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. Ramaseshan, A. Caruana and three anonymous reviewers for their comments on an earlier draft of this article.
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Davis, 1985). This study focuses on self-reported behavioral expectations in terms of the individual's likelihood to purchase the same brand again, as well as the likelihood of making that purchase from the same dealer. The brand/retailer case Just as an interrelationship exists between store loyalty and brand loyalty in the purchase of branded goods (cf. Cunningham, 1956, 1961; Carman, 1970; Stearns et al., 1982; Tranberg and Hansen, 1986; Mills, 1990), it might be expected that an interrelationship exists between dealer loyalty and brand (manufacturer) loyalty in the case of automobiles. There is also a distinction between customer satisfaction with the manufacturer (brand), and customer satisfaction with the dealership (retailer). Both aspects of satisfaction will influence the customer's next purchase decision, but it might be expected that manufacturer (brand) satisfaction is a determinant of intended brand repurchase, and dealer satisfaction a determinant of intended dealer repurchase. Moreover, customer manufacturer satisfaction might affect intended dealer repurchase, and customer dealer satisfaction might affect intended manufacturer repurchase. The dealership's predicament is compounded by the increasing competition from non-franchised outlets. 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. If customers are satisfied with every aspect of dealer service they are more likely to give the dealership favourable consideration for future purchases (Lovell, 1983). A satisfied customer will remain ``loyal'' to the brand The study In this study, past behavior (measured in terms of repeat purchases) and future purchase expectations are investigated within an automotive typology. A distinction is drawn between brand retention and dealer retention, and the relationship between the two discussed. In particular, the relationship between future intentions and past behavior is considered in an attempt to investigate the predictive ability of the latter. To this end, a number of hypotheses have been developed. The first two (H1a,b) investigate the role of past behavior, in terms of brand of car previously owned and dealership purchased from, on anticipated future behavior, in terms of brand purchase expectations. The tacit assumption is that a satisfied customer will remain ``loyal'' to the brand (all other factors being equal). In the modern automotive marketing environment, this is indeed a fair assumption to make. The degree of price competition at the retail level is so intense that, when factoring in discounts, rebates and low interest finance rates, price parity inevitably results. Furthermore, the growing oligopolisation of the manufacturing industry (e.g. Ford owning/controlling Jaguar, Mazda, Volvo and Aston Martin) and co-operation between manufacturers (e.g. Ford/VW, Ford/Nissan, GM/Toyota) has resulted in few, if any, sustainable product differences. Thus, it is hypothesized that: H1a: Expectation to purchase (Brand) is positively influenced by Repeat Purchase Behavior (Brand). H1b: Expectation to purchase (Brand) is positively influenced by Repeat Purchase Behavior (Dealer). The second set of hypotheses (H2a,b) also investigates the role of past behavior on anticipated future dealer rather than brand purchase expectations. It is again assumed that a satisfied customer will remain loyal to the dealer.
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H2a: Expectation-to-purchase (Dealer) is positively influenced by Repeat Purchase Behavior (Dealer). H2b: Expectation-to-purchase (Dealer) is positively influenced by Repeat Purchase Behavior (Brand). The third set of hypotheses (H3a,b) investigates the role of past behavior on consumers' willingness to recommend both brand and retailer. Once again, 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). H3b: Willingness to Recommend (Dealer) is positively influenced by Repeat Purchase Behavior (Dealer). The last set of hypotheses (H4a,b) investigates the relationship between expectation to purchase and willingness to recommend (both brand and dealer). These links seem particularly important to test given the influence of positive word-of-mouth. H4a: The higher the Expectation to Purchase a brand, the higher the Willingness to Recommend the brand. H4b: The higher the Expectation to Purchase from a dealer, the higher the Willingness to Recommend the dealer. 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, South Africa. Respondents were randomly recruited off a commercial database of new vehicle owners (customers who had bought a new vehicle in the last three years), and all respondents owned/drove small and mediumsized cars representing approximately 85 percent of the total new car market in South Africa. Excluded from the sample were large car owners (less than 15 percent of the total market). The sampling method employed succeeded in providing respondents who varied greatly in terms of personal characteristics. Respondents varied widely in terms of age: 9.3 percent 18-24 years; 45.8 percent 25-34; 35.3 percent 35-49 and 9.6 percent over 50 years. Of the sample 72.9 percent were male, and 27.1 percent female. To avoid fatigue, 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). 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). Two ten-point Likert scales anchored with Not at all likely = 1, and Extremely likely = 10 were used to measure: Intended Brand Purchase, and Intended Dealer Purchase. In terms of repeat purchase behavior, respondents whose last car owned was the same brand as their current car were grouped together. Customers/respondents who did not purchase the same brand were also categorised together. There was also a ``not applicable/other'' category which refers to respondents who do not buy their own cars, but may for example have company/lease cars assigned to them at their place of work. In other words, those respondents for whom no behavior-based loyalty quotient can be computed. Interval level dependent
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measures and correlated ordinal predictors led to the use of one-way analysis of variance (ANOVA) to test hypotheses H1 to H3. To test H4 (relationship between expectation to purchase and willingness to recommend), regression analysis was employed. Results Results of the analysis of variance and regression analysis are reported. Four hypotheses are accepted (H1a, H1b, H4a and H4b), and four rejected (H2a, H2b, H3a and H3b). Past behavior-future expectations: H1a is accepted (F = 7.832, p < 0.01). Future brand purchase expectation is dependent on past brand repeat purchase behavior. H1b is also accepted (F = 5.035, p < 0.05). Future brand purchase expectation is dependent on past dealer repeat purchase behavior. H2a is rejected. Future dealer purchase expectation is not dependent on past dealer repeat purchase behavior. Similarly, H2b is rejected. Future dealer purchase expectation is not dependent on past brand repeat purchase behavior. There appears to be no relationship whatsoever between willingness to recommend either the brand or the dealer, and repeat purchase behavior. Hypotheses H3a and H3b are therefore also rejected. In terms of the relationship between expectation to purchase (brand) and willingness to recommend (brand), Hypothesis H4a is accepted (see Table I) (R2 = 0.536, F = 374.6, p < 0.001). Similarly, there is a significant relationship between expectation to purchase (dealer) and willingness to recommend (dealer). Hypothesis H4b is therefore also accepted (see Table II) (R2 = 0.548, F = 386.4, p < 0.001). Discussion This study explored the increasingly important issue of customer retention in the strategy of South African automotive manufacturers and dealers. First, the ANOVA confirmed that there is no significant difference, based on past behavior, between those respondents who: (1) intend to purchase from the same manufacturer, (2) intend to purchase from the same dealer, (3) would recommend their current manufacturer, and (4) would recommend their current dealership. This is most likely because purchase intentions and likelihood of recommendation is so high. This could be interpreted to suggest that past behavior is not necessarily the best predictor of future behavior and more specifically, that customers' intentions are generally overstated. This is
Variables Model 1 Entered PB Removed R 0.732 R square 0.536 Adjusted R square 0.535 Std error of the estimate 1.5525

Table I. Expectation-recommendation: brand


Variables Model 1 Entered PD Removed R 0.741 R square 0.549

Adjusted R square 0.548

Std error of the estimate 1.8629

Table II. Expectation-recommendation: dealer


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in line with Bagozzi and Warshaw's (1990) observation regarding time frame between reporting an intention and actual behavior. When it is too remote for the individual to have crystallised plans, they report a behavioral expectation rather than intention. This would certainly apply to the automotive purchase decision-making process. Valid research metric In conclusion, purchase expectations/intentions data are still a valid research metric in high involvement product categories. The brand/consumer interface offers greater predictive ability than the retail/consumer interface. Retail behavior is probably influenced by numerous situational variables, such as changes in income; status; family structure; unforeseen environmental events; degree of voluntary control; stability of intentions; and new information all contribute to future behavior (Assael, 1996; Engel et al., 1995; Wilkie, 1994; Peter and Olson, 1996). Last, willingness to recommend (i.e. positive word-of-mouth) does not appear to be influenced by past behavior. Limitations of the study The empirical research addresses past behavior (loyalty), future intentions and recommendation in automotive marketing. Like all projects of a similar nature, this study has some obvious limitations which signal caution to the generalisability of the findings. First, the study was limited in that it was confined to a single typology, namely the automotive industry. Second, while respondents were randomly recruited to partake in the research, the sampling frame did not fully represent the population at large. Using product-based segmentation, respondents were drawn from small and medium-sized automobile owners only. Absent from the sampling frame were large-size automobile owners. While the latter segment represent less than 10 percent of the sample population, its exclusion is still, by definition, a limitation. A third limitation is the cross-sectional design employed. In general, longitudinal studies provide for stronger inferences. 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, country-of-origin or family tradition). Ongoing research into past behavior and future intent might attempt to develop better measures than those used in this study, and could also consider constructing a richer empirical model of antecedents and consequences.
References Assael, H. (1996), Consumer Behavior and Marketing Action, 5th ed., South-Western College Publishing, Cincinnati, OH. Bagozzi, R.P. and Warshaw, P.R. (1990), ``Trying to consume'', Journal of Consumer Research, Vol. 17, pp. 127-40. Bagozzi, R.P. and Yi, Y. (1989), ``The degree of intention formation as a moderator of the attitude-behavior relation'', Social Psychology Quarterly, Vol. 52, pp. 266-79. Bemmaor, A.C. (1995), ``Predicting behavior from intention-to-buy measures: the parametric case'', Journal of Marketing Research, Vol. XXXII, pp. 176-91. Carman, J.M. (1970), ``Correlates of brand loyalty: some positive results'', Journal of Marketing, Vol. 7, pp. 67-76. Cunningham, R.M. (1956), ``Brand loyalty, what, where, how much?'', Harvard Business Review, Vol. 34, pp. 116-18. Cunningham, R.M. (1961), ``Customer loyalty to store and brand'', Harvard Business Review, Vol. 39, pp. 127-8. Engel, J.F., Blackwell, R.D. and Miniard, P.W. (1995), Consumer Behavior, 8th ed., Dryden, Orlando, FL.
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Illingsworth, J.D. (1991), ``Relationship marketing: pursuing the perfect person-to-person relationship'', Journal of Services Marketing, Vol. 5, pp. 49-52. Juster, F.T. (1966), ``Consumer buying intentions and purchase probability: an experiment in survey design'', Journal of the American Statistical Association, Vol. 61, pp. 65-74. Lovell, W.W. (1983), ``Customer satisfaction: the new reality'', Standard Automotive Engineering Journal, Vol. 83 No. 11, p. 80. Mills, P.K. (1990), ``On the quality of service encounters: an agency perspective'', Journal of Business Research, Vol. 20, pp. 31-41. Peter, J.P. and Olson, J.C. (1996), Consumer Behavior and Marketing Strategy, 4th ed., Irwin, USA. Sambandam, R. and Lord, K.R. (1995), ``Switching behavior in automobile markets: a consideration-sets model'', Journal of the Academy of Marketing Science, Vol. 23 No. 1, pp. 57-65. Stearns, J.M., Unger, L.S. and Lesser, J.A. (1982), ``Intervening variables between satisfaction/ dissatisfaction and retail patronage intention'', American Marketing Association, Winter Educators Conference, pp. 179-82. Tranberg, H. and Hansen, F. (1986), ``Patterns of brand loyalty: their determinants and their role for leading brands'', European Journal of Marketing, Vol. 20, pp. 81-109. Warshaw, P.R. and Davis, F.P. (1985), ``Disentangling behavioral intention and behavioral expectation'', Journal of Experimental Psychology, Vol. 21, pp. 213-28. Wilkie, W.L. (1994), Consumer Behavior, 3rd ed., John Wiley, New York, NY.

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This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. 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. Research represents the only chance for a firm to predict the future. Yet, as we know, research into ``purchase intentions'' often gives misleading results. As a result some business people have become wholly cynical about market research and its value in business and marketing planning. Ewing examines one situation where actual consumer behaviour commonly differs from stated intentions. Trying to get to the bottom of this dilemma will assist businesses in getting the most from market research. 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 can only get future predictions generally right never specifically right unless of course you're employing a clairvoyant. It is this fact about the role of market and consumer research that creates the cynicism and distrust described above. Second, you should understand what question you are asking of the consumer. If you ask what the consumer ``intends'' you should for many respondents get the honest answer. ``Haven't a clue, guv!'' But the research process forces an answer from the consumer they have to make a choice. The result is that the consumer gives a dishonest reply so far as intentions are concerned. "If you buy a car tomorrow, 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. 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, as we've all observed, ``. . .individual-level observed behaviour differs from planned behaviour. . .'' and the further ahead in time of the purchase, the greater the chance of different behaviour from the stated intention. What, in reality, the consumer is expressing is an ``expectation'' rather than an ``intention''. Yes, I expect to buy a car from you again, ceteris paribus. But things might change considerably between now and the time when I replace my current car. We do not know the customer's intention because that customer does not himself know his intention. All we have is an expression of current expectations. 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. We cannot take these statements of expectation as a real prediction of future consumer behaviour. The obvious next question is to ask whether there exists other information that can assist in prediction. We know the consumer's average expectations but we also know that, taken alone such statements do not represent a reliable prediction. One popular piece of additional information applied to statements of intention is the consumer's past behaviour.

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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. But, for our purposes here, we need only concern ourselves with the distinction between the general and specific answers to the question. It is intuitive to observe that what I did yesterday does not necessarily influence what I may do tomorrow. At the same time we can say that, in the round, past behaviour indicates a predisposition to a certain type of behaviour. If we know from the past that, in general, 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. 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. Can we really accept, therefore, that the aggregation of the ``dishonest'' responses creates an ``honest'' finding? Ewing's findings substantiate this point and he observes that ``. . .past behaviour is not necessarily the best predictor of future behaviour and, more specifically. . .customers' intentions are generally overstated.'' It all seems pretty depressing but you didn't really expect to have a foolproof way of predicting future consumer behaviour. Market research however it's conducted does not produce certainty but acts to inform us in the decisions we have to take. Business disappointment with research stems, in the main, from a mistaken belief that investment in research removes the risks from marketing decisions. Funny things consumers that's what research tells us Consumers (people if you prefer) do not act according to a predictable set of rules. Research, therefore, can never answer a specific question such as whether your current customers will stay loyal when the time comes for them to purchase again. What research does provide is guidance about how consumers might behave at some unspecified point in the future. 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. 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. Any researcher who claims that their research will provide definitive answers for a client should be taken out back and shot. 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. There are no right answers and businesses, in the end, must accept that research only provides information about how we might handle the risks of marketing. 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''. Supplied by Marketing Consultants for MCB University Press.)

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