customer satisfaction and loyalty start with the product, culminate with the brand

13
Customer satisfaction and loyalty: start with the product, culminate with the brand Eduardo Torres-Moraga Facultad de Economı´a y Negocios, University of Chile, Santiago de Chile, Chile Arturo Z. Va ´squez-Parraga College of Business Administration, The University of Texas-Pan American, Edinburg, Texas, USA, and Jorge Zamora-Gonza ´lez Facultad de Ciencias Empresariales, University of Talca, Talca, Chile Abstract Purpose – Studies on customer satisfaction and loyalty have focused on brand rather than product. It is not that brand is not important, but the process of loving a brand starts with a product. Customers appreciate products by themselves, independent of the brand, as shown in their pursuit of satisfaction and development of loyalty. Such appreciation seems to be prominent regarding innovative products when compared to traditional products. This paper aims to investigate this issue and provide a product-brand typology. Design/methodology/approach – The paper takes the form of empirical research on a partial application of the typology. Findings – Results show that the relationship satisfaction-loyalty is significantly present when evaluating products alone albeit a weaker presence than when evaluating brand alone. Such unequal presence is corroborated in both traditional (bottled wine) and innovative (electronic) products even though it is much stronger in innovative products. The relationship satisfaction-loyalty is also present when evaluating product and brand combined, indicating that there is an intermediate position between product and brand. In contrast, the literature treats brand and product-brand as being in the same category thereby diminishing the importance of a useful difference between brand and product-brand. Practical implications – There are practical consequences of applying the typology and examining the findings. The relationship satisfaction-loyalty starts with the product, includes the product-brand, and culminates with the brand. This process is significantly more important regarding innovative products, such as electronics, as compared to traditional products such as wine. Originality/value – This study introduces a typology underscoring the pursuit of satisfaction and development of loyalty in three conditions of product presence versus brand presence, that is, product alone, brand alone, and product and brand combined. Keywords Customer satisfaction, Customer loyalty, Brands, Electronic commerce, Wines Paper type Research paper An executive summary for managers and executive readers can be found at the end of this article. Introduction This study aims at: . developing a comprehensive product-brand typology; . examining the relationship satisfaction-loyalty when evaluating the product alone; . comparing the strength of the relationship in either product alone or brand alone situations; . exploring the strength of the relationship in a product- brand combined situation; and . comparing the strength of the relationship in either traditional product or innovative product. The first section reviews the literature on the key concepts of this research: product, brand, customer satisfaction, and customer loyalty, and introduces the product-brand typology. The next section reports on the methodology used to partially test the relationships emerging from the typology as formulated in the propositions. The section on results gives an account on the validity of the measures used and the hypothesis tests performed. The remaining sections offer conclusions, practical implications, and suggestions for future research. Literature review Product and brand for customer relationships This review focuses on product and brand as two stages in the development of the benefits destined to satisfy customers’ needs and preferences, and satisfaction and loyalty as two stages in the customer’s response to the company offerings. It is assumed that product is an initial stage in the product offering whereas brand is a mature stage. Similarly, satisfaction is an initial stage in the customer response to a company offering whereas loyalty is a mature stage in such a response. When studying customer satisfaction and/or loyalty, research has focused on satisfaction or loyalty towards the brand, not the product. The existence of the product has been subsumed into the brand, thus ignoring brand as a separate reality. In addition, when studying the product, such as in The current issue and full text archive of this journal is available at www.emeraldinsight.com/0736-3761.htm Journal of Consumer Marketing 25/5 (2008) 302–313 q Emerald Group Publishing Limited [ISSN 0736-3761] [DOI 10.1108/07363760810890534] 302

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  • Customer satisfaction and loyalty: start withthe product, culminate with the brand

    Eduardo Torres-Moraga

    Facultad de Economa y Negocios, University of Chile, Santiago de Chile, Chile

    Arturo Z. Vasquez-ParragaCollege of Business Administration, The University of Texas-Pan American, Edinburg, Texas, USA, and

    Jorge Zamora-GonzalezFacultad de Ciencias Empresariales, University of Talca, Talca, Chile

    AbstractPurpose Studies on customer satisfaction and loyalty have focused on brand rather than product. It is not that brand is not important, but theprocess of loving a brand starts with a product. Customers appreciate products by themselves, independent of the brand, as shown in their pursuit ofsatisfaction and development of loyalty. Such appreciation seems to be prominent regarding innovative products when compared to traditionalproducts. This paper aims to investigate this issue and provide a product-brand typology.Design/methodology/approach The paper takes the form of empirical research on a partial application of the typology.Findings Results show that the relationship satisfaction-loyalty is significantly present when evaluating products alone albeit a weaker presencethan when evaluating brand alone. Such unequal presence is corroborated in both traditional (bottled wine) and innovative (electronic) products eventhough it is much stronger in innovative products. The relationship satisfaction-loyalty is also present when evaluating product and brand combined,indicating that there is an intermediate position between product and brand. In contrast, the literature treats brand and product-brand as being in thesame category thereby diminishing the importance of a useful difference between brand and product-brand.Practical implications There are practical consequences of applying the typology and examining the findings. The relationship satisfaction-loyaltystarts with the product, includes the product-brand, and culminates with the brand. This process is significantly more important regarding innovativeproducts, such as electronics, as compared to traditional products such as wine.Originality/value This study introduces a typology underscoring the pursuit of satisfaction and development of loyalty in three conditions of productpresence versus brand presence, that is, product alone, brand alone, and product and brand combined.

    Keywords Customer satisfaction, Customer loyalty, Brands, Electronic commerce, Wines

    Paper type Research paper

    An executive summary for managers and executive

    readers can be found at the end of this article.

    Introduction

    This study aims at:. developing a comprehensive product-brand typology;. examining the relationship satisfaction-loyalty when

    evaluating the product alone;. comparing the strength of the relationship in either

    product alone or brand alone situations;. exploring the strength of the relationship in a product-

    brand combined situation; and. comparing the strength of the relationship in either

    traditional product or innovative product.

    The first section reviews the literature on the key concepts of

    this research: product, brand, customer satisfaction, and

    customer loyalty, and introduces the product-brand typology.

    The next section reports on the methodology used to partially

    test the relationships emerging from the typology as

    formulated in the propositions. The section on results gives

    an account on the validity of the measures used and the

    hypothesis tests performed. The remaining sections offer

    conclusions, practical implications, and suggestions for future

    research.

    Literature review

    Product and brand for customer relationships

    This review focuses on product and brand as two stages in the

    development of the benefits destined to satisfy customers

    needs and preferences, and satisfaction and loyalty as two

    stages in the customers response to the company offerings. It

    is assumed that product is an initial stage in the product

    offering whereas brand is a mature stage. Similarly,

    satisfaction is an initial stage in the customer response to a

    company offering whereas loyalty is a mature stage in such a

    response.When studying customer satisfaction and/or loyalty,

    research has focused on satisfaction or loyalty towards the

    brand, not the product. The existence of the product has been

    subsumed into the brand, thus ignoring brand as a separate

    reality. In addition, when studying the product, such as in

    The current issue and full text archive of this journal is available at

    www.emeraldinsight.com/0736-3761.htm

    Journal of Consumer Marketing

    25/5 (2008) 302313

    q Emerald Group Publishing Limited [ISSN 0736-3761]

    [DOI 10.1108/07363760810890534]

    302

  • product development or product innovation, the customers

    response (e.g., satisfaction or loyalty) to it has been ignored.One of the consequences of such an approach is that

    marketers do not use the product as a base to gain customersatisfaction or to generate customer loyalty even if loyalty is

    reduced to customer retention or purchase repetition(spurious loyalty).The product can be a good starting point for providing

    satisfaction and generating loyalty, whereas the brand can be

    the mature stage of such processes. The intention is not todiminish the importance of the brand; instead, the intention is

    to recognize the importance of the product, separate from thebrand. The advantages of getting an early start with providing

    satisfaction and generating loyalty towards the productinclude market pioneering, first mover advantages, low-cost

    proactive innovation, and industry redefinition. Thedisadvantages of ignoring the product as an initial stage to

    develop company policies for satisfaction and loyalty includeloss of market opportunities, loss of market leadership, high-

    cost reactive innovation, and high-cost brand development.However, the recognition of the product as an initial stage

    to develop satisfaction and loyalty policies may not be equalacross different products. Some products, lets say traditional

    products, such as fresh food and drinks, may be in less need ofsuch policies, whereas innovative products, such as

    automobiles and electronic equipment, may be highlydependent on such policies.A typology including the product and the brand in their

    various levels of recognition, such as single product, product

    mix, and no presence, is developed and presented below andthe relationships emerging from it tested.

    Customer satisfaction as antecedent of loyalty

    Satisfaction is often used as a predictor of future consumerpurchases (Newman and Werbel, 1973; Kasper, 1988).

    Satisfied customers have a higher likelihood of repeatingpurchases in time (Zeithaml et al., 1996), of recommendingthat others try the source of satisfaction (Reynolds andArnold, 2000; Reynolds and Beatty, 1999), and of becoming

    less receptive to the competitors offerings (Fitzell, 1998).More specifically, satisfaction is found to be a necessary

    precursor of customer loyalty (Fitzell, 1998; Fornell, 1992;Reynolds and Beatty, 1999; Sivadas and Baker-Prewitt, 2000;

    Zeithaml et al., 1996). Whereas satisfaction and loyalty arerecognized as strongly related by most studies (Anderson and

    Sullivan, 1993; Fornell, 1992; Rust and Zahorik, 1993; Taylorand Baker, 1994), some consider the relationship to be

    interchangeable (Hallowell, 1996; Oliver, 1999), and some tobe unidirectional, that is, progressing from satisfaction to

    loyalty only (Strauss and Neuhaus, 1997). Satisfied customerstend to be loyal customers with (Rowley, 2005) or without the

    mediation of other variables (Coyne, 1989; Fornell, 1992;Oliva et al., 1992).

    Customer loyalty as an outcome of marketing

    relationships

    A quick observation of customer loyalty is repeated purchase(Ball et al., 2004; Copeland, 1923; Newman and Werbel,1973; Tellis and Chandy, 1998). In practical terms, firmswant repeated purchases mainly because such behavior in

    consumers can:. apparently show the customer preference for a brand or

    product (Bowen and Shoemaker, 1998);

    . reflect a customers purchase intention (Mellens et al.,1996); and

    . presumably secure profitability (Reichfeld and Sasser,1990; Rust et al., 2004; Reinartz et al., 2005) by increasingmarket share (Chaudhuri and Holbrook 2001).

    Yet, the literature has categorized this type of loyalty asspurious loyalty (Dick and Basu, 1994) or loyalty by inertia(Solomon, 1992; Bloemer and Kasper, 1994) because it onlysignals behavioral customer response. The consideration ofattitudes in addition to the behavioral representation makesloyalty not just richer conceptually (loyalty is a process, notjust an act) but also more useful for practical purposes, suchas influencing customers both attitudinally and behaviorally(Dick and Basu, 1994; Jacoby and Chestnut, 1978; Jacobyand Kyner, 1973; Oliver, 1999; Olson and Jacoby, 1971).Attitudinal loyalty reflects customers cognitive, affective, andconative predispositions to continue relating to the brand orcompany (Oliver, 1999) often involving customercommitment (Bloemer and Kasper, 1994; Morgan andHunt, 1994; Solomon, 1992) or, better yet, involving trustand commitment, in this order, after an initial experience ofcustomer satisfaction (Bravo et al. 2005; Vasquez-Parraga andAlonso, 2000; Zamora et al., 2004).Consequently, true loyalty (behavioral and attitudinal)

    would be more powerful to not only influence the bottom linebut also the mediating processes towards the bottom line suchas:. customers intention to favorably recommend the brand or

    company to others (Getty and Thompson, 1994);. horizontal communication (customer to customer),

    mouth-to-mouth communication in particular (Gremlerand Brown, 1999; Reynolds and Arnold, 2000; Srinivasanet al., 2002);

    . customers resistance to competitors offerings (Gundlachet al., 1995) and persuasive tactics to attract newcustomers (Dick and Basu, 1994); and

    . buzz marketing (Grifiin, 1995).

    Finally, loyalty is often considered to be a predictor of thefirms financial performance. The relationship, however, isoften established as part of a trio: customer satisfaction-customer loyalty-firms performance (Reichfeld and Sasser,1990; Zeithaml et al., 1990; Anderson et al., 1994; Storbackaet al., 1994; Rust et al., 1995; Hallowell, 1996; Fornell, 1992)

    Customer satisfaction-loyalty relationships bylevels of product-brand presence

    Product and brand are not synonymous (Schiffman et al.,1997). Yet, some authors have used them interchangeably,particularly when they have addressed repeated purchases(e.g., Dick and Basu, 1994; Oliver, 1997). As defined above,product and brand are significantly different bothconceptually and practically. Similarly, customer satisfactionand loyalty are significantly different even though they arestrongly and unidirectionally related.The following typology reflects a customer evolution in

    adopting a product or brand and in becoming loyal besidesachieving satisfaction. A customer usually starts judging aproduct in order to find the benefits it brings and thesatisfaction it promises (Reynolds and Beatty, 1999). Thegeneric or unbranded product would be enough to start sucha selection process. Inexperienced consumers with a line of

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

    Volume 25 Number 5 2008 302313

    303

  • products start with the product benefits and preferences

    whereas experienced consumers go directly to the brands. As

    the customer becomes more experienced with the product, he

    or she may focus on a brand.Similarly, products follow life cycles in combination with

    their brands: new products are first recognized as products

    and later, after the products have satisfied many customers

    and reached a more developed stage, as brands. In adopting

    cellular phones, for instance, recent customers adopt the

    product that best fits their needs or best appeals to them

    emotionally, symbolically, and/or cognitively (Park et al.,1986). More experienced but not highly experienced

    customers adopt a range of brands on the basis of both

    value and price, whereas highly experienced customers

    become loyal to a brand.The typology is an effort to represent the evolution of

    product to brand in customer choice and the sequential

    achievement of customer satisfaction and customer loyalty.

    Consequently, three levels of product presence (no presence,

    presence of a product, and presence of a set of products) are

    compared to three levels of brand presence (no presence,

    presence of a brand, and presence of a set of brands). Each

    cell generated in the comparison (nine cells in total eight

    cells are useful because cell 1 is mute) serves to characterize

    the type of customer satisfaction-loyalty relationship (see

    Figure 1) as described in the following analyses.

    Satisfaction-loyalty to the product alone (cell 2)

    Customers that evaluate products for the first time focus on

    the product benefits, not the brand. The emphasis is in the

    tangible attributes of the product, which are visible and

    accountable to the buyer (Keller, 1993). For instance,

    consumers adopting a cellular phone for the first time may

    look at its functions and properties and postpone any

    particular interest in a brand. Similarly, low-price car buyers

    may focus on the characteristics of the car regardless of brand.

    Satisfaction-loyalty to a bundle of products (cell 3)

    In addition to focusing on product benefits, some first-time

    customers extend such evaluation to bundles of products. For

    example, first-time customers who adopt hi-tech products or

    innovative products such as electronics or fashion clothing

    usually focus on the product functions or attributes,

    respectively.

    Satisfaction-loyalty to a brand alone (cell 4)

    Some customers choose a brand regardless of the product.

    For instance, customers who like the Sony brand in any

    product Sony may offer, televisions, disc players, photo

    cameras, etc. may demonstrate brand loyalty by making

    subsequent purchases of Sony products without regard to

    other brands. Some brands are linked to products in similar

    lines, such as Sony or General Electric, whereas other brands

    relate to products in different product lines such as Nestle or

    the new Apple. Still some customers identify themselves with

    a brand or adopt a brand because it reflects their personality

    (Aaker, 1997). Most studies have focused on brand alone

    emphasizing its intangible attributes or associations in various

    forms: a) company advertising, public relations, and word-of-

    mouth communications (Biel, 1992; Krishnan, 1996) media

    reports on consumption (Biel, 1992), consumers direct

    experience with the product (Biel, 1992; Burnkrant and

    Unnava, 1995; Haynes et al., 1999; Hoch and Deighton,1989), brand-owning companys reputation (Nguyen and

    LeBlanc, 2001), country of origin (Erickson et al., 1984;Hong and Wyer, 1990), and product distributors (Pettijohn

    et al., 1992). Some studies have also emphasized thecombination of tangible and intangible attributes in the

    product portrayals (Keller, 1993) or market equilibrium

    (Wernerfelt, 1991).

    Satisfaction-loyalty to product-brand combinations

    (cell 5)

    Customers choose the same product line in a range of brands,

    for instance, television sets in three brands only, Sony, Philips

    and Samsung. Some customers choose clothes or cars within

    a range of two or three brands only. Some studies on

    customer loyalty seem to have taken into account this type of

    combination (Dick and Basu, 1994; Oliver, 1999).

    Conditional satisfaction-loyalty to a brand (cell 6) or

    conditional satisfaction-loyalty to a product (cell 8)

    Customers attempt to link a product with a brand and set

    their preferences in product-brand combinations. A customer

    may choose the product or the brand first and then follow

    with the brand or the product, respectively (Jacoby and

    Kyner, 1973; Brucks, 1985; Dawar and Parker, 1994). For

    instance, a customer may choose Sony TV, JVC disc players,

    and Cannon photo cameras. Similarly, consumers may choose

    Figure 1 Types of satisfaction-loyalty relationships by levels of product-brand presence

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

    Volume 25 Number 5 2008 302313

    304

  • Levis blue jeans, Arrow shirts, and Dockers socks. The

    selection is conditional because when deciding on television

    sets, the customer will only favor a Sony brand, or whenadopting disc players, the buyer will only embrace a JVC

    brand, and so on.

    Satisfaction-loyalty to a set of brands (cell 7)

    Some customers, particularly when associating their decisionsto cultural, social or economic peculiarities, buy within a

    short span of brands regardless of product. For instance, rich

    customers are found to fit this profile in brand choice bybuying luxury or upscale brands only such as Porsche and

    Lexus in cars, Gucci and Hartmann in bags and luggage,Celine and Vuitton in clothes, and Burberry and La Vallee in

    clothing stores. Similarly, customers that distinguishthemselves by generation, place of origin, or group beliefs

    limit their brand choices to particular sets of brands, the ones

    that distinguish them in terms of generation, place of origin orgroup beliefs, respectively (Boush et al., 1987; Park et al.,1991; Dacin and Smith, 1994; Herr et al., 1996; Klink andSmith, 2001).

    Satisfaction-loyalty to a basket of product-brand

    combinations (cell 9)

    Many customers choose sets of products within ranges ofbrands, one set per range of brand. For example, in choosing

    women cosmetics, some women prefer a set of brands (e.g.,Lancome, Ahrens, and Helena Rubinstein) for face cosmetics,

    and another set, for body cosmetics, and so on. The

    expressions if I buy moisture lotion it has to be Olay orChanel or if I buy wet shaving products they have to be

    Gillette or Colgate Palmolive are common in this cell ofconsumer choices.Cells 2 (product alone), 4 (brand alone) and 5 (product-

    brand) will be subject to test using a survey research. From

    the above considerations regarding these three cells, we can

    formulate the following proposition and hypotheses:

    P1. The relationship satisfaction-loyalty is present in bothconsumer products and brand choices, includingproduct-brand combinations. Yet, this relationship is

    stronger when customers adopt brands than when theyadopt products. It is stronger when they adopt

    innovative products than when they choose

    traditional products.H1. The relationship satisfaction-loyalty is significant in

    both consumer products and brand choices, includingproduct-brand combinations.

    H2. The more the brand is used in adopting the product,the greater the impact of satisfaction on loyalty.

    H3. The impact of satisfaction on loyalty is greater inadoptions of product-brand combinations than in

    product adoptions alone, but weaker than in brand

    adoptions alone.H4. In product adoptions alone, the impact of satisfaction

    on loyalty is greater when adopting innovate productsthan it is when adopting traditional products.

    Methodology

    Research design

    A 3 2 research design was applied in order to secure threegroups of consumers (in terms of their choices of brand,

    product, or product-brand) and two groups of consumers

    adopting either innovative products or traditional products.The strength of the relationship between satisfaction and

    loyalty is measured for each type of adoption: product alone,

    product-brand, and brand alone. Six off-the-shelf scalesmeasuring each construct, satisfaction or loyalty, were

    adapted from the literature as a starting point. The

    satisfaction measures were adapted from Sharma andPatterson (1999); Brockman (1998); Smith and Barclay

    (1997); Nguyen and LeBlanc (1998); and Veloutsou et al.(2004). The loyalty measures were adapted from Rowley and

    Dawes (2000); Yoon and Kim (2000); Nguyen and LeBlanc

    (1998); and Veloutsou et al. (2004).Because some of the scales were originally developed in

    different contexts of consumers, a pilot study with focusgroups and a group of industrial and retail executives

    preceded the actual study. This resulted in four depurated

    scaled items per construct. A pre-test of the questionnairefollowed with 105 respondents and resulted in the elimination

    of an additional item per construct after evaluating factoranalysis results in light of conceptual contents presented

    above. Thus, three scaled items of a Likert type of seven

    points (1 completely disagree through 7 completelyagree) for each construct were applied in the final survey.

    Samples

    Two types of products were adopted, electronic products to

    represent innovative products and wine, to representtraditional products. A quota sample was comprised of

    customers who buy electronic products or wine for a total of

    1,223 respondents (830 buyers of electronic products and 393buyers of wine). The first sample is more than two times the

    second sample due to the greater variety of products andbrands in that segment and because the group of product-

    brand adopters was absent in the sample of wine buyers.The resulting sample of electronic-product buyers is

    distributed as follows: 43 percent adopted product-brands,

    40 percent adopted products alone, and 17 percent adoptedbrands alone. Among wine buyers, 55 percent adopted

    products alone and 45 percent adopted brands alone.

    Results

    Reliability

    Confirmatory factor analysis with Varimax rotation resultsrevealed that each construct, customer satisfaction and loyalty

    among buyers of electronic products, is one-dimensional as

    shown in Table I. All Cronbach alphas (Cronbach, 1951) areabove the 0.70 threshold established by Nunnally (1978), and

    all item-total correlations are above the 0.30 limit (Nurosis,1993). Table I shows similar results for wine buyers except for

    the Cronbach Alpha above 0.60 in the loyalty factor, still

    acceptable for exploratory factor analysis (Hair et al., 1998).

    Hypothesis tests

    Hypothesis tests were conducted using structural equationmodeling (EQS version 6.1). A maximum likelihood method

    (Hu et al., 1992) is used in order to prevent potentialproblems derived from the lack of univariate normality in the

    data. Figures 2-6 show that the relationship between customer

    satisfaction and loyalty is positive and significant (at 0.01level) in the three situations of adoption: product alone, brand

    alone and product-brand combination. These results support

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

    Volume 25 Number 5 2008 302313

    305

  • Table I Satisfaction and loyalty: factor analysis by type of product

    Brand alone Product-brand Product alone

    Indicator Loading Indicator Loading Indicator Loading

    Loyalty: electronic products LTM1 0.80 LMP1 0.78 LTP1 0.59

    LTM2 0.84 LMP2 0.84 LTP2 0.88

    LTM3 0.83 LMP3 0.79 LTP3 0.88

    CA* 0:76 CA 0:72 CA 0:70EV* 67:63 percent EV 64:66 percent EV 63:29 percent

    Satisfaction: electronic products STM1 0.88 SMP1 0.87 STP1 0.89

    STM2 0.86 SMP2 0.86 STP2 0.92

    STM3 0.92 SMP3 0.89 STP3 0.90

    CA 0:86 CA 0:85 CA 0:89EV 78:53 percent EV 77:03 percent EVA 81:99 percent

    Loyalty: wine products LTM1 0.76 LTP1 0.85

    LTM2 0.75 LTP2 0.85

    LTM3 0.76 LTP3 0.56

    CA* 0:63 CA 0:63EV* 57:53 percent EV 58:39 percent

    Satisfaction: wine products STM1 0.73 STP1 0.67

    STM2 0.79 STP2 0.67

    STM3 0.63 STP3 0.80

    STM4 0.76 STP4 0.79

    CA 0:70 CA 0:71EV 53:17 percent EV 53:93 percent

    Notes: CA Cronbach alpha; EV Explained variance

    Figure 2 Satisfaction-loyalty relationship for brand alone (electronic products)

    Figure 3 Satisfaction-loyalty relationship for product-brand combinations (electronic products)

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

    Volume 25 Number 5 2008 302313

    306

  • H1. Similarly, Table II shows acceptable adjustment measures

    for all relationships in both types of products, innovative and

    traditional, providing additional support for H1.In support of H2, the relationship satisfaction-loyalty is

    stronger in brand adoptions as compared to product

    adoptions as observed in Table III and in Figures 2-6. The

    main reason brand adoptions produce more customer

    satisfaction, which in turn produces more customer loyalty,

    has to do with the addition of intangible characteristics to the

    product tangible features. Intangible components include

    psychological benefits of symbolic and emotional value (Park

    et al., 1986) and a consumers preference for the personality

    he or she sees reflected in the brand (Aaker, 1997). Product

    adoptions alone generate customer satisfaction, which in turn

    generates customer loyalty on the basis of tangible product

    features such as useful functions and attractive appearance.

    Most often this is the initial stage of customer satisfaction and

    an important one. Yet, it takes the brand to raise the level of

    satisfaction with some intangible benefits.In support of H3, Table III and Figures 2-6 show that the

    impact of satisfaction on loyalty is greater in adoptions of

    product-brand combinations than in product adoptions alone,

    but weaker than in brand adoptions alone. This is an

    intermediate stage of development in the relationship between

    Figure 4 Satisfaction-loyalty relationship for product alone (electronic products)

    Figure 5 Satisfaction-loyalty relationship for brand alone (wine products)

    Figure 6 Satisfaction-loyalty relationship for product alone (wine products)

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

    Volume 25 Number 5 2008 302313

    307

  • sellers and buyers, providers and customers. A product-brand

    combination brings the advantages of both the tangible

    features of the product and the intangible benefits of the

    brand in a period of development in which neither the

    product nor the brand is able to dominate. On the consumer

    side, this stage is represented by a medium-level of

    satisfaction-loyalty as compared to the one generated for the

    brand alone, assuming the dominance of the brand was able

    to generate greater levels of satisfaction by maximizing the

    virtues of both tangible and intangible, especially the later

    ones, benefits of the product.Finally, in support of H4, Table III and Figures 2-6 show

    that the impact of satisfaction on loyalty is greater when

    adopting innovative (electronic) products than when adopting

    traditional (wine) products. Following a recommendation by

    Ailawadi et al. (2001) and using the Fishers Z-test and aprocedure introduced by Cohen and Cohen (1983) to test the

    significance of the difference, the results in Table III show that

    the relationship is significantly stronger among adopters of

    innovative (electronic) products than it is among adopters of

    traditional (wine) products. This may happen because

    innovative products require more customer participation in

    the process of delivering the product to the customer. By the

    nature of innovative products, customers become more active

    in their search for the product at the same time they become

    more scrutinizing and more demanding of satisfaction. Thus,

    innovative-product manufacturers and providers work harder

    at satisfying the customer, whereas traditional-product

    manufacturers and providers may just rely on a customary

    base of customers to keep going.

    Conclusions

    Customer satisfaction and loyalty can be achieved by either

    emphasizing the product or the brand depending on the level

    of development of the product or product line in the markets.

    At the introduction stage of the product, emphasis is on the

    product and the tangible aspects of it. Satisfaction can be

    achieved at this stage if there is a fit between the customer

    need and the product offering. The intensity of satisfaction

    attained at this stage, however, is not high mainly because of

    the absence or scarcity of the psychological benefits included

    in the product offering. At a more mature stage of the

    product, there are given opportunities for the brand to excel if

    it is able to add enough intangible benefits to the product.

    When successful, this new bundle of tangible and intangible

    benefits can produce higher customer satisfaction, which in

    turn can generate higher customer loyalty in the long term.Yet, a more mature stage can combine a product-brand

    where both tangible and intangible benefits are salient without

    any set (tangible or intangible) prevailing over the other.

    Alternatively, this stage can privilege the brand emphasizing

    the intangible benefits. The consequences of either approach

    (product-brand or brand alone) on customer satisfaction,

    however, are distinctive: the brand alone is able to produce a

    stronger satisfaction-loyalty relationship than the product-

    brand combination. Nevertheless and despite the benefits of

    achieving the stage of a brand alone, it seems that both

    customer and manufacturer/provider have to pull up the

    brand. The manufacturer/provider cannot reach the highest

    stage without the customers help. The customer would finally

    Table II Satisfaction-loyalty relationship: goodness of fit by type of product

    Electronic products Wine products

    Brand alone Product-brand Product alone Brand alone Product alone

    Goodness of fit indicesx2 50.405 (8) 30.354 14.466 44.925 45.265

    df 8 8 8 13 13

    p # 0.001 # 0.001 # 0.001 # 0.001 c 0.001GFI 0.887 0.975 0.986 0.939 0.934

    Increases in goodness of fitNFI 0.885 0.966 0.985 0.836 0.831

    IFI 0.902 0.975 0.993 0.878 0.873

    CFI 0.900 0.974 0.993 0.874 0.869

    Adjustments for parsimonyx2/df 6.3 3.79 1.8 3.5 3.48

    Table III Satisfaction-loytalty relationship: intensity of the differences

    Differences

    Fishers

    Z-testSignificance

    level

    Electronic products versus wine productsSTP! LTP (electronics) and STP! LTP (wine) 6.32 0.01STM! LTM (electronics) and STM! LTM (wine) 6.91 0.01Electronic productsSTM! LTM (electronics) and STP! LTP (electronics) 2.33 0.05STP! LTM (electronics) and STP! LTP (electronics) 5.19 0.01STP! LTP (electronics) and STP! LTP (electronics) 2.86 0.01

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

    Volume 25 Number 5 2008 302313

    308

  • accept the brand alone as the subject of his satisfaction and

    follow-up loyalty.The above fitting process between product or brand

    adoption and customer satisfaction-loyalty is more intense in

    the world of innovative products, such as electronic products,

    as compared to traditional products, such as wine. Innovativeproduct processes, such as the ones involved in electronic

    products, accelerate the interaction between adoption andrelationships. The intensity in technological developments is

    usually matched by customers higher participation in such

    processes. By contrast, traditional products do not requireeither technological innovations or active customer

    participation or both in the usually slow-paced development

    of the product. As a consequence, traditional products do notreach high levels of satisfaction-loyalty, at least not as high as

    the ones achieved in innovative-product processes.

    Managerial implications

    The practical implications of the results achieved in this

    research are three-fold. First, managers, particularly, product

    or brand managers, should pay attention to the developmentof the product by itself. The customer pays attention to such

    development when the product is new or innovated and shows

    satisfaction even when taking into account the product alone.Of course, the level of customer satisfaction achieved is not

    very high and does not generate strong customer loyalty but is

    present and can mark the initial point of a successful path inboth product development and customer satisfaction-loyalty.Second, managers should use the product-brand stage, an

    intermediate level in product development, to enhance the

    brand and its intangible benefits over the product and its

    tangible features. The combination is not always of equalparts or equal importance, but it signals the presence of both,

    without either prevailing over the other. To continue progress

    in product development, the company should attempt tomake the brand salient by enhancing the intangible benefits of

    the product if it finds that the customer is ready for that stage.

    The customer is ready for the brand stage when he or she candecide on the basis of the intangible benefits of the product,

    ceteris paribus, the tangible features already in place. If movingto the higher stage of the brand alone is difficult, either theproduct-brand combination will have a longer life, delaying

    the stage of the brand alone, or the customer satisfaction is

    strongly linked to the tangible benefits of the product, makingmore costly to the company the addition of the chosen

    intangible benefits.Finally, the shifting process from product alone to product-

    brand to brand alone is faster in technologically innovative

    products. In this product category, managers can use suchadvantage to achieve the highest stage (brand alone) faster

    with probably short periods of product alone and product-

    brand combinations. Conversely, managers can haveinsurmountable problems in accelerating the process in

    traditional products. Correct policies linked to traditional

    products can emphasize the product or the product-brand inthe long term even if the stage of the brand alone can develop

    at some point in the future. This is a healthy guidance for

    managers of traditional products, so that they should notwaste time and resources in developing the brand in

    traditional products that require longer life in the previousstages of product alone and/or product-brand combinations.Consequently, company positioning policies should:

    . start with the product, particularly when developing new

    products or innovating existing ones;. evaluate product and brand combined when product

    development has reached a state of maturity that is

    considered enough to maintain a brand; and. culminate with the policy by focusing on the brand as the

    last stage in the learning process.

    Limitations and future research

    When studying the satisfaction-loyalty relationship as derived

    from the product adoption process, the literature has ignored

    both the product alone and the product-brand combinations.

    In this research, we have addressed this forgotten problem

    and clarified that customer satisfaction and loyalty start early

    in the process, that is, in the development stage of the product

    alone. Despite this clarification, however, much remains to be

    done. We have tested only three quadrants in the proposed

    typology of satisfaction-loyalty relationships by levels of

    product-brand presence. The other quadrants, except the

    one where there is no brand and product, can also be and

    should be tested empirically in order to validate their

    corresponding formulations. In addition, further studies are

    needed regarding the two stages we have tested empirically,

    that is, the product alone and the product-brand

    combinations. Whereas previous studies have privileged the

    brand over the product in its effects on customer satisfaction

    and loyalty, this is a new study and validation of the findings is

    called for in other product lines, other market conditions, or

    other measures.

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    Corresponding author

    Arturo Z. Vasquez-Parraga can be contacted at: avasquez@

    utpa.edu

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

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  • Executive summary and implications formanagers and executives

    This summary has been provided to allow managers and executivesa rapid appreciation of the content of the article. Those with aparticular interest in the topic covered may then read the article intoto to take advantage of the more comprehensive description of theresearch undertaken and its results to get the full benefit of thematerial present.

    Why product is important

    Research into customer satisfaction and loyalty has so far

    almost exclusively focused on brands. In contrast, products

    have largely been ignored and considered as part of the brandrather than a separate entity. That customer satisfaction and

    loyalty can in fact be directed at the product has therefore not

    been acknowledged. One consequence has been reluctance

    from marketers to use the product as a means of generating

    satisfaction and loyalty. Torres-Moraga et al. put forward theview that the product is the starting point for the satisfaction

    and loyalty process, whereas the brand represents the

    advanced stage.Gaining satisfaction and loyalty at this initial phase can

    result in several benefits, including first-mover advantage,

    low-cost proactive innovation and an opportunity to redefine

    the market. In contrast, lost market opportunities, marketleadership and the higher costs associated with reactive

    innovation are some consequences of ignoring the product

    stage for such purposes.However, the influence of product on satisfaction and

    loyalty may depend on the product type. Indications suggest

    there will be less impact with traditional goods like food and

    drink but considerable significance when the products are

    innovative. Automobiles and electronic equipment are two

    product areas noted in this respect.Satisfaction is essentially viewed as the antecedent to

    loyalty. Satisfied customers become loyal customers who

    express this loyalty through their purchase behavior and

    future purchase intention. But loyalty that merely exists at this

    behavioral level is dismissed as spurious by some observers.

    The argument here is that loyalty is more profound when it

    incorporates attitude as well as behavior since it reflects

    cognitive, affective and conative attachment on the

    customers part. This level of loyalty is often expressed

    through such as positive word-of-mouth, recommendation to

    others and a refusal to consider rival offerings.

    A satisfaction-loyalty typology

    Based on the existence of a life cycle whereby products evolve

    into brands, the authors suggest a typology to elucidate the

    process. Eight different stages combining various levels of

    product and brand presence are suggested. The present study

    focuses on customer satisfaction-loyalty relating to three of

    these stages:1 Product alone, when consumer evaluation occurs for the

    first time.2 Brand alone some consumers will opt for a specific

    brand for a range of different products. Take Sony, for

    instance. Those who support this brand may purchase

    television sets, disc players, cameras or various otherelectrical appliances or gadgets.

    3 Product-brand past research has acknowledged this

    intermediate phase where customer selection of a

    particular product will be limited to within a small range

    of brands. One example would be narrowing the choice of

    a new television to Samsung, Phillips or Sony.

    Research was designed to examine the extent of satisfaction-

    loyalty within these different adoption phases in relation to

    either traditional or innovative products. Wine was chosen for

    the traditional product and electronic goods as its innovative

    counterpart. Of the 1,233 respondents, 830 purchased

    electronic products and 393 were wine buyers.Findings indicated that customer satisfaction and loyalty

    was:. Positive and significant in all three situations.. Stronger for brand adoption compared to product

    adoption. Adoption of the product alone is enough to

    generate the satisfaction that in turn can lead to loyalty.

    This occurs on the basis of functional attributes and other

    tangible product features such as appearance. However,

    the brand is also able to boast additional components

    containing symbolic and emotional value. In additional to

    attachment with these intangible attributes, potential

    exists for the customer to engage with the personality

    perceived in the brand.

    Likewise, the impact of satisfaction on loyalty was greater for:. Product-brand adoption than for product adoption alone

    but weaker than for brand adoption alone. The product-

    brand stage combines both tangible product qualities and

    intangible brand benefits during a development stage

    when neither product or brand can dominate.. Adoption of innovative products than for adoption of

    traditional products. The authors suggest that consumers

    are more involved with innovative products and may

    therefore be more demanding. This is likely to force

    manufacturers of such products into striving harder to

    deliver satisfaction. In contrast, consumer involvement

    with traditional products is invariably much lower.

    The study findings show that satisfaction and loyalty do begin

    much earlier in the process than previously acknowledged.

    Satisfaction is possible at the initial stage providing the

    product meets customer needs. However, the scarcity or

    absence of intangible and psychological benefits at this time

    means that the intensity of satisfaction is usually not high. But

    this does not lessen the significance of this stage in helping to

    generate customer loyalty and satisfaction that can increase

    during the subsequent phases and over the longer term.

    Marketing ideas and future research

    Torres-Moraga et al. urge marketers to place more importance

    on the development of the product as customer interest in

    such developments is high when products are new or

    innovative. Any resulting satisfaction may be limited but it

    provides the foundation that can aid product development as

    well future increases in customer satisfaction and loyalty.In the product-brand stage, the emphasis should be on

    showcasing the intangible features more than the products

    salient qualities. When the customer is influenced by

    intangible features alone, the time is right to move to the

    final stage and make the brand more salient. If marketing the

    brand alone proves difficult, the product-brand stage may

    have to last longer. On occasions, it could be that satisfaction

    is inextricably linked to the tangible product benefits. A focus

    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

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  • on the intangible features becomes more difficult when that isthe case.The transition from product alone to brand alone via

    product brand is much quicker for technologically innovativeproducts. Managers should use this knowledge to accelerateto the mature stage as quickly as possible. Conversely, movingto this stage with traditional products can be extremelydifficult and ultimately unproductive. Rather than wastingvaluable time and resources, it is more advisable to invest theeffort into developing effective strategies for the product aloneand product-brand stages.Given the novel approach of this study, Torres-Moraga et al.

    suggest further exploration of customer satisfaction andloyalty within these initial phases. Likewise, the findings

    should also be examined in relation to different product types,market conditions or other measures.Further study could additionally concentrate on other

    stages of the authors typology. This research could, forexample, investigate customer loyalty to a bundle of productsor set of brands or to various product-brand combinations.Study could also focus on situations where satisfaction andloyalty is conditional because it depends on specific mixes ofproduct type and brand such as, for example, Sony televisionsor JVC disc players.

    (A precis of the article Customer satisfaction and loyalty: startwith the product, culminate with the brand. Supplied byMarketing Consultants for Emerald.)

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    Customer satisfaction and loyalty

    Eduardo Torres-Moraga, Arturo Z. Vasquez-Parraga and Jorge Zamora-Gonzalez

    Journal of Consumer Marketing

    Volume 25 Number 5 2008 302313

    313

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