Impact of Brand Image on Customer Commitment & Loyalty in India

By: Dr. Malhar Kolhatkar Dr. Nirzar Kulkarni Dr. Ambedkar Institute of Management Studies & Research DeekshaBhoomi, Nagpur 10 Maharashtra

Abstract In specific terms, the need for this study arose as a result of the identified issues on the impact of brand image on customer perceived quality and satisfaction. Although theoretically it can be argued that perceived quality and customer satisfaction will lead to customer loyalty as brand image is considered to represent the aspect of market offering that enables organizations create associations in the minds of the customers and add extra value in form of emotional benefits, which extend beyond product attributes and functional benefits.

Keywords: Brand image, Quality, Customer satisfaction, Customer loyalty Introduction The study is carried out to explore the behavioral outcomes of customer perceived quality and satisfaction to conduct a study that explores the impact of brand image on other antecedents of consumer behaviors like commitment and loyalty. For example, India being

one of the fastest growing economies in the world requires focused study that will provide extra knowledge on such sensitive and useful issue as how brand image can influence customers expression of loyalty and or commitment to a product (market offering or even organization). Most of the knowledge on brand image originates, same may not be said of India, even though the Indian economic impact affects every other developed, developing and under-developed economy. This study will focus on exploring the impact of brand image on customer loyalty and commitment within the Indian Mobile phone sector. A brief analysis of the mobile phone sector in India, a show there were over 3,000 million mobile phone service subscribers in India in the year 2009, and has now increased to around 6,000 million. Amongst these subscribers are customers loyal to well-known brands like Nokia, which controls about 40 percent with 48.1 percent market preference, followed by Motorola, Sony Ericsson, and Samsung with 15.90 percent, 10.20 percent, and 9.10 percent preference for Sony Ericsson, Motorola, and Samsung, respectively,. The purpose of this study is, therefore, to conceptualize and measure brand influence on consumers by examining the impact of brand image on customer loyalty and commitment in Indian mobile phone market and to assess possible association between brand image and these variables using the most suitable research approach for a study of this kind.

Literature review Brand image Brand image represents an important aspect of marketing activities; branding and market

offering with varied definition and approaches to its conceptualization (Burleigh and Sidney, 1955; Dobni and Zinkhan, 1990; Martinez and Pina, 2003). A widely accepted view is that brand image represents customers perceptions of a brand as reflected by the brand associations held in consumer memory (Herzog, 1963; Keller, 1993a, b). Keller (1993a, b) argued that these associations could originate from customers direct experience or from information obtained on a market offering or due to the impact a pre-existing associations with an organization had on consumer. Brand image is, therefore, the mental picture or perception of a brand or a branded product or service and includes symbolic meanings that consumers associate with the specific attributes of a product or service (Dobni and Zinkhan, 1990; Padgett and Allen, 1997; Aperia and Back, 2004). Brand image represents the reasoned or emotional perceptions consumers attach to specific brands (Low and Lamb, 2000, p. 352) a set of beliefs held by customers about a particular brand, based upon some intrinsic and extrinsic attributes of a market offering resulting to perceived quality, and customer satisfaction. Perceived quality refers to the customers perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives. While customer satisfaction although subject to debate as there are dichotomies to its definition, can be likened to customer feeling of pleasure or disappointment as a result of experience or the act of comparing a products perceived performance (or outcome) in relation to a customers expectations. It is, therefore, the degree to which customers are satisfied or dissatisfied with a business, product, or specific aspect of a product or service provided by a business. Customer satisfaction can be explained as the outcome of a

comparison between perceived product performance and pre-purchase expectations. An outcome argued in Fornell et al. (2006) as leading to long-term customer loyalty. Fornell et al. (2006) developed a model called the Customer Satisfaction Index aimed at

encouraging organizations adaptation of market-orientation and to recognize that the outcomes of perceived quality and brand image could be customer satisfaction. Fornell et al. (2006) study concludes that brand image impacts on customer perceived quality and satisfaction with the result of strong satisfaction being possible customer loyalty. Brand image and customer loyalty Whereas the linking of customer satisfaction to and with loyalty is a useful development, there remains uncertainty to what customer loyalty truly is. The concept of loyalty has diverse views in terms of its conceptualization and measurement. Various researchers tend to view the concept from different perspectives. For example, loyalty to Ehrenberg (1988) and Jacoby (1971) represents customer repeat purchase a view that if interpreted may suggest that customer loyalty only exist whenever customers embark on a do again (second buying journey) on a market offering. Whereas there is a connection between repeat purchase and loyalty, in that for a customer to be seen as loyal, it may be expected that such customer will continue with the act of buying a market offering repeatedly. It is, however, necessary to note that such view does not provide one with deep practical understanding of the concept as a customer may repeat purchase not necessarily because of a continues feeling of satisfaction or as a result of real intent to stay with a brand. But could be as a result of strong necessity for a market offering at that point in time and, therefore, may not necessarily imply the expression

loyal to a market offering and or brand as there may be limited alternatives. Other authors (like Hess and Story, 2005) seem to view loyalty as preference and commitment, respectively. While preference may represent an attribute of loyalty, there may be strong difficulty in accepting loyalty to directly mean commitment in that both concepts follow similar principles but are indeed different. Oliver (1999) also suggests that ultimate customer loyalty is a function of perceived product superiority, personal fortitude, social bonding, and their synergistic effects. Further analysis of Olivers discussion tend to suggest not that loyalty is commitment, but that loyalty is an aspect of commitment called attitudinal or emotional component of commitment. Uncles et al. (2003) viewed customer loyalty from a 3 dimensional perspectives, an approach that seems to originate from Meyer and Allen (1991) study on employee commitment; where loyalty is referred to as favorable attitudes or beliefs for one brand which could seem to be an emotional attachment to that brand. Second, loyalty can be seen as a behavioral factor, for example, the purchase behavior to one special brand and loyalty as an accident approach that presumes the correlation between attitudes and behavior. Whatever represents the meaning of brand loyalty as the list of authors with varied approaches seems endless, the fact remains that brand loyalty exist as a result of the interaction between a customers relative attitude to a special brand, and also their repeat purchase behavior for that brand. Brand loyalty may, therefore, exist as a result of repeat purchase or due to the absence of perceived differences between brand alternatives Muncy (1996). It could also exist as a result of simple habitual purchase behavior (Assael, 1998),

which could mean long or short-term involvement on repeat purchasing of a market offering or brand. A knowledge of brand loyalty is, therefore, necessary as according to Wood (2000) brand image is tailored to the needs and wants of a target market so as to facilitate brand loyalty. That is customer involvement in repeat purchase behavior on a brand and the success or otherwise of this process determines the degree of brand loyalty and will probably have influence on consumer long-term loyalty. This study therefore proposes that: H1. Brand image has positive impact on customer loyalty. H2. Brand image has a positive impact on customer commitment.

Research methodology Questionnaire design and demographic data This research scale items were designed as an interval rating seven-point Likert scale to be responded to on a scale of one to seven to indicate the extent of participants agreement or disagreement with a given statement, where seven represents very strongly agree, six represents strongly agree, five represents agree, four neither agree nor disagree, three disagree, two strongly disagree, and one very strongly disagree. The purpose of this improved method is to offer the respondents with more choice and help capture their feelings toward the brand of their choice and provide room for the assessment of the scales validity and reliability. The scale items were, therefore, administered as a questionnaire with 26 items statement to

250 participants within the Vidharbha region (Maharashtra , India), with 40 percent usable response rate. Some items within the scale originates from this study while other items (statements) like I feel a sense of duty to influence my friends to identify with this brand because it represents something unique were adopted from an existing research scale on commitment and brand (Ogba, 2008). The data were analyzed using exploratory factor analysis for scale item reduction and factor extractions, and Cronbach an internal consistency measure for reliability test, and ANOVA and correlation analysis for the assessment of association and or differences of variables. Outcome from the demographic aspect of the research shows that 61 percent of participants represent male respondents while 39 percent were female. On participants age, 4 percent represents the age groups 16-18, 86 percent representing the age group 1923, while 16 percent of the participants are between the age ranges 24-28. On participants educational level, 72 percent of total participants were university undergraduates pursuing a Bachelor degree, while 14 percent are on Diploma Programme and 14 percent on Postgraduate programme with 11 percent on Masters degree and 3 percent involved in other types of postgraduate studies. Analysis The study subjected the scale items to exploratory factor analysis using Principal Component Analysis (PCA) with varimax rotation for scale reduction, factor extraction and identification of smaller set of factors with eigenvalues greater than or equal to 1.0. Prior to performing the PCA, the suitability of data for factor analysis was assessed, the inspection of the correlation matrix revealed the presence of many coefficients of 0.3 and

above. The factorability of the correlation matrix was supported and established using Bartletts (1954) test of Sphericity, which showed components extractions are statistically significance ( p = 0.000). Output from the PCA was the reduction of the scale items from 26 items to 25 usable scale items and the extraction of 5 components representing perceived quality, customer satisfaction, customer commitment and loyalty. The five factor extractions from the 25 scale items are with eigenvalues above 0.1. The first component shows a maximum (total) initial eigenvalues of (11.025), that is a cumulative percentage of approximately 44 percent of the total variances. While the other components showed a maximum extraction of (2.346), (1.926), 1.549 and 1.231, which is approximately, 9.384 percent, 7.7 percent, 6.1 percent and 4.9 percent of the respective total variances, representing a total of 72.3 percent cumulative percentage of the initial eigenvalues of all the variances. In other words, the factor extraction represents a total of 72 percent of all the 25 items in the scale before factor rotation. The reliable (suitable and usable) of items were also explored with high scale reliability of 0.942. The motive behind the above analysis was to test for instruments suitability and usability in a study of this kind as evidences abound of various studies that suppose to measure such behavioral components, but in reality are measuring something similar or different from the concept in study. This outcome, therefore, suggests that the scale is indeed measuring the impact of brand image on customer loyalty and commitment. ANOVA

In testing the behavioral and attitudinal aspects of customer loyalty and commitment in relation to brand image, the two propositions were subjected to statistical test using one way ANOVA. Output from the assessment of customer loyalty and commitment on brand image as presented in Table I, showed strong evidence of statistical significances at p, 0.05 levels. The significance level for each customer component was: customer loyalty (0.000) and Customer commitment to the product (mobile phone) at (0.000). Correlation analysis Correlation analysis was employed in assessing the possible association between each component variables: customer loyalty, customer commitment and brand image. Preliminary analysis was performed to ensure no violation of the assumption of normality, linearity and homoscedasticity. The outcome of the analysis was a moderately strong positive relationship (correlation) between brand image and the components, with stronger correlations existing between brand image and customer commitment at r = 0.809 and strong association between brand image and customer loyalty at r = 0.777. Therefore, r is significant beyond the 1 percent level (0.01) as shown in Table II. Table I one way ANOVA of customer loyalty and commitment on brand image ANOVA Sum of Df Satisfaction Commitment Loyalty Between groups Within groups Total Between groups Within groups Total Between groups squares 1083.681 768.679 1852.360 2446.839 626.321 3073.160 1857.150 24 75 99 24 75 99 24 Mean square 45.153 10.249 101.952 8.351 77.381 F 4.406 12.208 8.367 Sig. 0.000 0.000 0.000

Quality

Within groups Total Between groups Within groups Total

693.600 2550.750 876.161 538.29 1414.190

75 99 24 75 99

9.248 36.507 7.174 5.089 0.000

Table II Correlation between brand image, customer loyalty and commitment Correlations Image Pearson correlation Sig. (2-tailed) N 100 Loyalty Pearson correlation 0.777** Sig. (2-tailed) 0.000 N 100 Image Pearson correlation 1 Sig. (2-tailed) N 100 Commitment Pearson correlation 0.809** Sig. (2-tailed) 0.000 N 100 Note: Correlation is significant at the 0.01 level (2-tailed) Further analysis of customer loyalty Following Bowen and Chen (2001) recommendation and to further explore customer loyalty to brand and by implication the degree of brand image impact on customer loyalty, this study subjects participants response to frequency analysis. The study measured customer loyalty using behavioral assessment of customer loyalty through two dimensions: (1) Evaluation of customer repeat purchase; and (2) Attitudinal assessment of customers in form of evaluation of customer recommendation of brand to others. Image 1 Loyalty 0.777** 0.000 100 1 100 0.809** 0.000 100 1 100

The outcomes from the above analysis is 74 cumulative percent for possible participants repeat purchase of the market offerings associated with the brand in study and 70 percent for possible participant recommendation of same to others. These percentages present more than half of the total respondents. Consequent upon this outcomes indicating brand impact upon the variables, this study accepts the propositions as established in hypotheses one and two (H1 and H2) of this research that: brand image has positive impact on customer loyalty and commitment. This research outcome implies that a positive brand image will enable possible high customer loyalty and customer commitment towards a market offering. However, integrating this outcome to that of other research on the impact of brand image on customer perceived quality and satisfaction. Discussions This research set out to explore the possible impact of brand image customer loyalty and commitment, and to evaluate these in the light of customer behavior towards selected brands within the Indian mobile phone market sector. Following outcomes from review of literatures and conceptual frameworks relating to brand image, customer loyalty and commitment, two hypotheses were generated and further assessed using previously developed and tested research instrument on brand image, customer commitment and loyalty. The outcome from the study suggests that effective study of the impact of brand image on customer loyalty and commitment in Nonwestern environment is possible, but should be approached as individual/independent variables in that each variable tends to show strong independent on each other and yet

highly dependent upon brand image as a customer with low level loyalty may express high level commitment towards a brand or market offering. The outcome also supports the assumptions that brand image has positive impact on customer loyalty and commitment. The study and its finding was identified as indeed fundamental as previous researchers have conducted less research on the impact of brand image on the variables explored in this research and with evidence of lack of substantive empirical study on the subject within developing economy like India. The study was seen as urgent and relevant. To show evidence of dependability, the study not only measured items suitability and usability, but also linked its findings with similar study on brand image and other components like customer perceived quality and satisfaction and draws an empirical conclusion that brand image has positive impact on customer perceived quality, satisfaction, loyalty and commitment. This study is, therefore, a contribution to and an addition/consolidation of an existing knowledge. The study was advanced by exploring the impact of brand image on key customer behavioral variables. The approach employed in this study made the exploration of a study of this kind possible in that the study not only acknowledged the lack of available common definition of the concepts discussed, but also acknowledged the difficulties in its measurement and thereafter employed a quantitative approach that logically developed assumptions for the study of various issues within the study. Following the results from this study, therefore, one can conclude that brand image can positively influence customers perceived quality on a market offering and also boost customer satisfaction, loyalty and commitment towards a market offering. It is also evident

that these variables have strong association to and with brand image. This implies that a good brand image is that which impacts positively on this entire customer variable: customer satisfaction, loyalty, perceived quality and commitment to a market offering and not necessarily on one or few of the variables. This, therefore, represents the degree of the relevant of this study, that a good brand image must positively impact on customers loyalty and perceived quality and should also influence to a greater degree the extent to which customers perceives a market offering and express satisfaction to such offering for long-term delight and sustainable profit. Managerial implications of study and recommendations As earlier reviewed, brand image is considered to be significant in influencing customer behavior positively. Managers within, and outside the sector, India and other non collectivist culture should acknowledge findings from this study and the relevance of the valuables studied and the power of brand image in influencing consumer behavior and seek to constantly explore and assess brand image impact on similar variables for effective and long-term customer delight. The danger, therefore, is that whereas it is known that a poorly developed and presented brand image will lead to disaster, the neglect of such vital organizational issue, may lead to loss of customers as there may be low satisfaction and therefore low loyalty and commitment to organizations market offering. Recommendations for further research Studies on brand image and most importantly brand equity and there impact within and outside the organization is still in its infancy and is evolving with more complications in terms of definition and measurement. Further research is, therefore, needed on the

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