Loyalty is more of a journey than a destination

Loyalty is more of a journey than a destination

(Duffy, 1998)

Author:

Wieteke Jansen

1356836

A research on which marketing communication instruments are most effective in reaching (different) loyalty

segments

Author:

Wieteke Jansen 1356836

Place:

Groningen Date:

May 2005

Schwarzkopf & Henkel ` Rijks universiteit Groningen

Brugwal 11 Postbus 72

3432 NZ Nieuwegein 9700 AB Groningen

Supervisor Schwarzkopf & Henkel: Supervisors R u G:

Drs. M. Wijnen Drs. T.L.J. Broekhuizen

Drs. F. Becker-Ritterspach

Bedrijfskunde

International Business

Preface

This final thesis marks the end of my study at the University of Groningen as a student of International Business at the Faculty of Management and Organization. My period as an intern at Henkel has provided me the wonderful opportunity to work and do research in the dynamic fast moving market and has given me useful insights, both on a personal and professional level.

My sincere thanks go out to all people at Henkel who made me feel part of the company and who were always willing to assist in my research. A special word of thanks goes to Monique Wijnen, for all her time and effort in supporting me. Furthermore I would like to thank Rein van den Bosch for his advice and feedback concerning the questionnaire. But most of all I would like to thank my supervisor from the University, Thijs Broekhuizen. I want to thank him for his clarifying insights, advice, guidance and patience throughout the process and for always being willing to help.

Finally I would like to thank my friends and family for their support during the finalisation of my thesis!

Wieteke Jansen

Groningen, 22 May 2005

Executive summary

This research has been executed for the hairstyling department of Schwarzkopf & Henkel. For S&H, having and retaining loyal customers is a very important objective. This is not only due to the various advantages that come along with it but also because of the highly competitive market in which S&H operates. In a market like this, a loyal customer base is a very valuable asset. S&H stresses that in order to retain and preferably increase the loyalty of their customers, a focused marketing mix strategy is needed. In this research is chosen for the marketing communication tool of the marketing mix, as this tool is the easiest to adapt by S&H itself. Initially, the study aimed at understanding the effectiveness of marketing communication. Accordingly, the following research question was formulated: “which loyalty segments can be distinguished within the Dutch consumer hairstyling market and how can the several loyalty segments be targeted regarding marketing communication with the purpose of retaining and/or increasing the loyalty in these segments?” However, it became clear that this was not feasible as longitudinal data on data sales and each marketing communication instrument was needed. Therefore it was chosen to investigate which marketing communication instruments are the most effective in reaching which consumers according to their degree of loyalty. It must be remarked that it concerns the loyalty within the hairstyling market and not so much the loyalty of the current customers of S&H.

Brand loyalty

Based on the literature, the following definition of brand loyalty is used: “the biased (i.e., non- random), behavioural response (i.e., purchase), expressed over time, by some decision-making unit, with respect to one or more alternative brands out of a set of such brands, and is a function of psychological (decision-making, evaluative) processes” (Jacoby and Chesnut, 1978). In line with this definition is chosen for a micro-deterministic approach of brand loyalty with a combination of

behavioural and attitudinal factors. When combining the behavioural and attitudinal components, a four-quadrant matrix is obtained that serves to classify customers into four loyalty segments known as: loyalty, spurious loyalty, no loyalty, and latent loyalty (Dick and Basu, 1994; Schijns, 2000).

Marketing communication

S&H uses various marketing communication instruments in order to influence the consumers, namely:

sales promotions and in-store communication (action communication), advertising and Public Relations (theme communication). Action communication is mainly focused on influencing the purchase

behaviour of the consumers and theme communication is mainly focused on influencing the

knowledge and/or attitude of the consumers. Furthermore theme communication is necessary for

generating brand familiarity.

Survey

Based on these subjects, a questionnaire was developed, which was completed by 162 hairstyling consumers who had bought hairstyling products during the past year at the pharmacist and/or supermarket. The sample turned out to be representative regarding gender, age and proportion between the brands. The surveying took place “on the street” where the researcher physically met respondents and asked them to fill out the questionnaire. This took place in five different cities at locations relevant for this research.

Results

Satisfaction and commitment were found to be good predictors of attitudinal loyalty. Commitment can be defined as the extent to which a subject emphatically wants to hold on to a brand choice in a future purchase situation (Bloemer, 1993). S&H could increase the satisfaction of the (potential) customers in order to make them more attitudinal loyal to its brands. Commitment on the other hand is harder to increase as consumers switch a lot between hairstyling brands.

Based on self-reported data on past purchase behaviour (behavioural loyalty) and on attitudinal loyalty, the respondents were classified into four clusters. The loyalty segmentation looks as follows:

It must be remarked that between behavioural and attitudinal loyalty exists a strong positive correlation. Based on the classification, it seems that consumers are either loyal (42%) or not loyal (30%). The stages in between (spurious and latent loyal) are less strongly represented (14% each).

In general the utilisation and influence of marketing communication tools (i.e., action and theme communication) regarding the purchase of hairstyling products is rather low. The following table shows whether the different loyalty segments can be targeted by action and/or theme communication.

The cross indicates that a segment uses and is influenced by the marketing communication tool above average.

Low

Latent Loyalty 14%

Loyalty 42%

No Loyalty 30%

Spurious Loyalty 14%

Attitudinal loyalty

Behavioural loyalty Strong

Weak

High

Loyalty Segment Action Communication Theme Communication Loyalty

Spurious Loyalty X

No Loyalty X X

Latent Loyalty X X

The table shows that loyal customers do not use and are not strongly influenced by action and theme communication. It seems that they are loyal and remain loyal and not many investments through marketing communication are needed. It is dangerous to assume though that no efforts are needed to keep them loyal. The spurious loyalty segment does not use and is not strongly influenced by theme communication. From the literature it was assumed that theme communication is suitable for building and maintaining a relationship with the existing customers (spurious loyalty and loyalty) but it appears that mass media is not appropriate to accomplish this goal. The no loyal and latent loyal customers use and are influenced by both action and theme communication. It would be most effective to target these segments by a combination of both tools. Furthermore, as the products of S&H seem to be suitable for trial purchases, action communication should be used to stimulate trial purchases of the latent loyal and no loyal customers in the hope for future loyalty.

Furthermore it was investigated which action and theme communication instruments are used most frequently on a 7-point scale and which have the most influence on a 5-point scale. Regarding the action communication instruments, samples are used most often (4.52), followed by price-offs (3.55) and bonus packages (2.86). These instruments also appear to most strongly impact purchase behaviour (price-offs 3.50; samples 3.17; bonus packages 3.03). Contest/sweepstakes are used the least often (1.30) and also appear to influence the purchase behaviour the least (1.57). Regarding the theme communication instruments, Public Relations is paid more attention to (3.35) than advertising (3.23). This instrument also appears to impact the purchase behaviour more (Public Relations 2.46;

advertising 2.22).

Next it was researched whether the use and influence differs between the segments. Direct action communication instruments (price-offs, bonus packages, samples, premiums, displays) should be targeted at the no loyalty segment and to some extent at the spurious loyalty segment while the indirect action communication instruments (coupons, refunds, saving actions, contest/sweepstakes) should be targeted at the loyalty segment and to some extent at the latent loyalty segment.

Public Relations is most effective in reaching the latent, loyalty and no loyalty segment. The loyalty segment can furthermore be targeted with advertisements. To reach the spurious loyalty segment, it is recommended to use TV commercials.

Finally, Public Relations is the most effective instrument to increase commitment. The no loyalty and

the latent loyalty segment are most likely to be reached. Advertising on the other hand is more

effective in influencing the quality perceptions and should be targeted at the no loyalty segment.

Table of Contents

CHAPTER 1 INTRODUCTION AND PROBLEM DEFINITION ...9

1.1 I NTRODUCTION ...9

1.2 S CHWARZKOPF & H ENKEL ...9

1.3 D UTCH CONSUMER HAIRSTYLING MARKET ... 10

1.4 R EASONS FOR THE RESEARCH ... 10

1.5 P ROBLEM DEFINITION ... 11

1.6 D ATA COLLECTION ... 13

1.7 S TRUCTURE OF THE RESEARCH ... 14

CHAPTER 2 BRAND LOYALTY ... 16

2.1 I NTRODUCTION ... 16

2.2 D EFINITION OF BRAND LOYALTY ... 16

2.3 A PPROACHES OF DEFINING BRAND LOYALTY ... 19

2.4 M EASURING BRAND LOYALTY ... 20

2.4.1 Behavioural measures... 21

2.4.2 Attitudinal measures... 23

2.5 P REDICTORS OF ATTITUDINAL LOYALTY ... 23

2.5.1 Satisfaction ... 24

2.5.2 Commitment ... 26

2.5.3 Image... 27

2.5.4 Relationship between predictors attitudinal loyalty ... 28

2.6 L OYALTY SEGMENTS ... 31

2.6.1 Segmentation ... 31

2.6.2 Loyalty segmentation ... 32

2.6.3 Development strategies ... 34

2.7 C ONCLUSION ... 37

CHAPTER 3 MARKETING COMMUNICATION... 39

3.1 I NTRODUCTION ... 39

3.2 M ARKETING COMMUNICATION ... 39

3.3 A CTION COMMUNICATION ... 40

3.3.1 Personal selling... 40

3.3.2 Direct marketing communication... 41

3.3.3 Sales promotion... 41

3.3.4 In-store communication ... 44

3.4 T HEME COMMUNICATION ... 45

3.4.1 Advertising... 45

3.4.2 Sponsoring... 45

3.4.3 Fair/Exhibition ... 46

3.4.4 Public Relations ... 46

3.5 E FFECTS MARKETING COMMUNICATION ON BRAND LOYALTY ... 46

3.5.1 Effects action communication ... 46

3.5.2 Effects theme communication... 50

3.6 M ARKETING COMMUNICATION DEVELOPMENT STRATEGIES ... 51

3.7 C ONCLUSION ... 52

3.8 C ONCEPTUAL MODEL ... 53

CHAPTER 4 THE RESEARCH ... 55

4.1 I NTRODUCTION ... 55

4.2 R ESEARCH METHODOLOGY ... 55

4.2.1 Questionnaire ... 55

4.2.2 Sample ... 57

4.2.3 Quality demands ... 57

4.2.4 Process of data ... 58

4.3 R ESEARCH RESULTS ... 59

4.3.1 General information and representativeness of sample ... 59

4.3.2 Results predictors of attitudinal loyalty ... 61

4.3.3 Results loyalty segments... 65

4.3.4 Results characteristics loyalty segments... 67

4.3.5 Results marketing communication... 70

CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS ... 82

5.1 I NTRODUCTION ... 82

5.2 C ONCLUSIONS PREDICTORS OF ATTITUDINAL LOYALTY ... 82

5.3 C ONCLUSIONS LOYALTY SEGMENTS ... 83

5.3.1 Conclusions loyalty... 83

5.3.2 Conclusions spurious loyalty ... 83

5.3.3 Conclusions no loyalty ... 84

5.3.4 Conclusions latent loyalty... 84

5.4 C ONCLUSIONS MARKETING COMMUNICATION STRATEGY ... 85

5.4.1 Conclusions action communication ... 85

5.4.2 Conclusions theme communication... 85

5.5 R ECOMMENDATIONS S CHWARZKOPF & H ENKEL ... 87

5.6 D ISCUSSION ... 89

Appendix 1a Questionnaire Dutch

Appendix 1b Questionnaire English

Chapter 1 Introduction and Problem definition

1.1 Introduction

It was already in the twenties that the marketing literature recognised the importance of brand loyalty for companies when it became clear that brand loyal consumers provide companies many economic and competitive advantages. Schwarzkopf & Henkel, after this referred to as S&H, also recognises these advantages, which is one of the reasons that it initiated this research about brand loyalty.

This chapter discusses some background information and the design of the research. First of all, some historical information about S&H is discussed. Next to this the Dutch consumer hairstyling market is reviewed in order to gain some insight into the market in which S&H operates. It must be emphasised that this study focuses on the retail market and that the professional hairstyling market is left out of consideration. The background information is followed by the reasons for the research, which leads to the research objective, the research question and the sub-questions. Furthermore, the method of data collection used to obtain the answer to the research question is reviewed. The chapter concludes with an overview of the content of the chapters of the research.

1.2 Schwarzkopf & Henkel

Originally Henkel is a German family company, which was founded in 1876 by Fritz Henkel. In the meanwhile, the organisation has grown to being a multinational company. Henkel has around 50,000 employees, who are employed in 340 establishments in more than 70 countries. Together this is known as the Henkel Group, whose main office is located in Düsseldorf, Germany. In 2004 Henkel had a sales value of 10,592 million euro and a profit of 544 million euro (www.henkel.com).

The activities of Henkel in the Netherlands started in 1908 with the introduction of Persil wash detergent. In 1929 Henkel expanded its activities to Belgium. Henkel the Netherlands and Henkel Belgium became responsible for the Benelux market, which is again a part of the Henkel Group.

Henkel Benelux realised in 2004 a sales value of 449 million euro (www.henkel.be).

Henkel Benelux is divided into four business sectors: Laundry and Homecare, Cosmetics and Toiletries, Consumer and Craftsmen adhesives and Henkel Technologies. The different business sectors and the brands that belong to each sector are shown in table 1.1. The Cosmetics and

Toiletries division is known as Schwarzkopf & Henkel. S&H was established in 1995 when Henkel took

over Schwarzkopf, which made them in Europe one of the leading suppliers in the field of hair

cosmetics. It is the S&H division in the Netherlands who initiated this research.

Table 1.1 Business sectors and brands Henkel Benelux (www.henkel.be)

1.3 Dutch consumer hairstyling market

Due to duties of secrecy, the characteristics of the Dutch consumer hairstyling market cannot be reflected.

1.4 Reasons for the research

As mentioned before, brand loyal customers can provide companies many economic and competitive advantages. One important economic advantage is that the marketing costs are lower when keeping existing customers compared to attracting new ones. Reicheld and Sasser (1990) found that it might cost five times as much to attract a new customer as to keep a current customer happy. Furthermore they found that if a company would retain just 5 percent more of its customers, profits would increase by 25 to 125 percent.

Loyal customers bring along various other economic and competitive advantages, like:

• Loyal customers are less price sensitive which leads to the ability of premium pricing (Rowley and Dawes, 2000; Chaudhuri and Holbrook, 2001; Reicheld and Sasser, 1990)

• Loyal customers buy more: they increase sales by purchasing a wider variety of products, by making more frequent purchases and by buying more expensive goods (Bowen and Chen, 2001;

Sirohi et al., 1998)

• Loyal customers spread positive word-of-mouth, which is the best available advertising a company can get (Bowen and Chen, 2001; Rundle-Thiele and Mackay, 2001; Reicheld and Sasser, 1990;

Chaudhuri and Holbrook, 2001)

Business Sector Brands Market Share 2004

Laundry and Homecare Persil, Witte Reus, Dixan, Fleuril, Data, Sil, Wipp Express, Silan, Bref 52% of market share Henkel Benelux

Cosmetics and Toiletries Consumer division 24% of market share

Vision, Vital Colors, Country Colors, Live, Poly Color, Soyance, Henkel Benelux Re-Nature, Color Refresher (Colorations) Gliss Kur, Schwarzkopf

(Hair Care) Junior Powerstyling, Taft, Junior, Gliss Kur Styling (Hairstyling) Diadermine, Fa, Theramed (Body Oral Skin)

Professional division

Igora, Bonacure, Osis, Natural Styling, Volume Plus, Silhouette, Style, Professionelle, Flotty, Smyx

Consumer and Craftsmen Consumer division 12% of market share

adhesives Pritt, Perfax, Pattex, Rubson Henkel Benelux

Construction industry Ceresit, Thomsit, Tangit, Ponal

Henkel Technologies Surface Technologies, Industrial Adhesives, Loctite Engineering Adhesives 11% of market share Henkel Benelux

• Loyal customers are less sensitive to the marketing efforts of competitors like marketing

communication or a decrease in price (Delgado-Ballester and Munuera-Alemán, 2001; Chaudhuri and Holbrook, 2001; Javalgi and Moberg, 1997)

• Loyal customers reduce the probability of brand switching as they have fewer reasons to engage in an extended information search among alternatives (Javalgi and Moberg, 1997; Gournaris and Stathakopoulos, 2004)

• A loyal customer base reduces the risk of brand extensions and market penetration (Rundle-Thiele and Bennett, 2001; Gournaris and Stathakopoulos, 2004)

• A loyal customer base allows a company to devote its energies to other matters like quality improvement (Rowley and Dawes, 2000; Zins, 2001)

• A loyal customer base is seen as a substantial entry barrier to competitors (Delgado-Ballester and Munuera-Aléman, 2001)

Having and retaining loyal customers is for S&H a very important objective. This is not only due to the various advantages that come along with it but also because of the kind of market in which S&H operates. The hairstyling market can be characterised, as a highly competitive market where switching between brands is the rule rather than the exception. This is intensified by the price war that started more than a year ago. During the price war, brands are offered at their lowest price and promotions take place continuously. In a market like this, a loyal customer base is a very valuable asset.

This study researches the extent of brand loyalty in the Dutch consumer hairstyling market in general as well as the extent of brand loyalty for the hairstyling brands of S&H and its main competitors. In order to accomplish this, the consumers in the hairstyling market are divided into four loyalty segments based on their behavioural and attitudinal loyalty. S&H emphasises that in order to retain and preferably increase the loyalty in these loyalty segments, a focused marketing mix strategy is needed. In this research is chosen for the marketing communication tool of the marketing mix, as this tool is the easiest to adapt by S&H itself. Moreover there is quite some research available concerning its effect on brand loyalty.

1.5 Problem definition

The problem definition consists of a research objective and a research question. In order to provide

an answer to the research question, it is split up into a number of sub-questions. The following

research objective, research question and sub-questions are formulated for this research:

Research objective

To analyse the extent of brand loyalty in the Dutch consumer hairstyling market in order to distinguish several loyalty segments and to provide insight to S&H on how to target these loyalty segments regarding marketing communication with the purpose of retaining and/or increasing the loyalty in these segments.

It is expected that the findings and the conclusions from the research are relevant for the hairstyling department of the S&H division in the Netherlands.

Research question

Which loyalty segments can be distinguished within the Dutch consumer hairstyling market and how can the several loyalty segments be targeted regarding marketing communication with the purpose of retaining and/or increasing the loyalty in these segments?

Sub-questions

The research question is divided into the following eight sub-questions:

1. What is the definition of brand loyalty and which approaches are distinguished for defining the concept?

2. How can brand loyalty be measured?

3. Which variables predict attitudinal loyalty?

4. How can loyalty segments be classified?

5. Which elements of the marketing communication tool can be distinguished?

6. What effects does marketing communication have on brand loyalty?

7. Which elements of the marketing communication tool can be used to develop target strategies for the identified loyalty segments?

8. Based on the conclusions, which recommendations can be provided to S&H?

Explanation of concepts

Some of the concepts mentioned in the research question are defined below so there will be no confusion concerning the definition of them during the research.

• Loyalty segment

A segment can be defined as a distinct group of buyers with different needs, characteristics or

behaviours who might require separate marketing mixes. When a market is segmented by loyalty,

buyers are divided into distinct groups according to their degree of loyalty (Boekema et al., 1989:

• Marketing communication

The goal of marketing communication is to influence the behaviour and/or attitude of the persons in the target group. The marketing communication tool consists of action communication, focused on influencing the behaviour of the target group and of theme communication, focused on influencing the attitude of the target group. There are various marketing communication instruments that can be used by a company in order to accomplish this, e.g.: sales promotions, advertising, personal selling, Public Relations, sponsoring (Floor and van Raaij, 2002: 43).

Restrictions

This study focuses on the Dutch consumer hairstyling market, meaning that the professional market (hairdresser business) is left out of consideration. Furthermore it is executed among persons who have bought hairstyling products in the past year. With regard to the marketing communication tool, only consumer promotions are taken into account as this research concerns consumer purchases.

1.6 Data collection

In this research two types of data collection are used in order to gather the necessary information, namely: desk research and questionnaires.

Desk research

A lot of information that is necessary for this research is gathered by doing desk research. Information obtained by desk research is information that has already been collected by others for different purposes (Saunders et al., 2003: 188). The information is used in order to gain more insight into this particular subject. With the purpose of getting an impression of what has already been published, a literature study is performed. During this literature study various articles and books regarding this subject are reviewed. Furthermore, information that is available at S&H, like annual reports and previous researches, are studied to gather the necessary background information. The secondary data is a useful source to start answering the research question. In order to obtain more specified

information, primary data is used, which consists in this study of a questionnaire.

Questionnaire

A questionnaire is a form of data collection in which each person is asked to respond to the same set of questions in a predetermined order (Saunders et al., 2003: 280). A questionnaire is a good method for collecting a lot of information from a lot of different persons. The desk research serves as input for the questions that are asked in the questionnaire. The questionnaire is executed among a large number of hairstyling consumers in order to obtain a representative picture of the market. Because of this, the questionnaire consists of structured and closed questions. In paragraph 4.2.1, the

methodology of the questionnaire is discussed more extensively.

1.7 Structure of the research

This paragraph provides an overview of the structure of the research and indicates which sub- questions are answered in which chapter.

Chapter 2 discusses the theory on brand loyalty with the purpose of providing a clear picture of the complex concept. The chapter reviews various definitions of brand loyalty and the various approaches on how to define the concept. Furthermore, the differences between behavioural and attitudinal loyalty are explained as well as how to measure both variables. Besides this, the different predictors of attitudinal loyalty are discussed. The chapter concludes with a loyalty classification based on the behavioural and attitudinal component. The first four sub-questions are answered.

In chapter 3, the theory on the marketing communication tool is discussed, which provides an answer to sub-question 5. First of all, the differences between action and theme communication are discussed. Next to this, the chapter provides an overview of the various marketing communication instruments that can be used to target the different loyalty segments. Furthermore, the positive and negative effects of marketing communication on brand loyalty are discussed, which answers the sixth sub-question. Finally, it discusses which type of marketing communication (i.e., action or theme communication) would be appropriate for which loyalty segment. The chapter concludes with the conceptual model for this research.

In Chapter 4, the methodology of the study is justified. This chapter discusses the reasons for using a questionnaire and the layout of the questionnaire. Furthermore the sample, the quality demands and the process of data are reviewed. Next to this, the results of the research are presented and analysed. First of all, some general information about the respondents is provided and the

representativeness of the sample is determined. Moreover, the results concerning the predictors of attitudinal loyalty are discussed. Furthermore, based on the behavioural and attitudinal component, the hairstyling market is divided into four loyalty segments, which is followed by a description of each segment. Finally the results regarding the marketing communication tool are reviewed.

Chapter 5 draws various conclusions from the results of the research that were presented in chapter

four. Based on the conclusions, the chapter provides various recommendations to the management of

S&H. The conclusions and recommendations together provide an answer to the seventh and eight

research question. This chapter finishes with a discussion of the restrictions of the research and

suggestions for future research.

Figure 1.4 Structure of the research

Chapter 4:

• Research methodology

• Research results

Chapter 5:

• Conclusions

• Recommendations Chapter 2:

• Brand loyalty Chapter 3:

• Marketing communication

• Effects marketing communication on brand loyalty

• Conceptual model Chapter 1:

• Description of market and organisation

• Research objective

• Research question Introduction and

Research design

Theoretical framework

Research

Conclusion

Chapter 2 Brand Loyalty

2.1 Introduction

As brand loyalty has intrigued investigators for at least three decades, a sizeable body of literature has evolved. While reviewing this work, it became clear however that there are a lot of inconclusive, ambiguous and contradictory findings. This chapter discusses the complex concept of brand loyalty and tries to structure the findings from the literature review.

The first part of the chapter focuses on sub-question 1: what is the definition of brand loyalty and which approaches are distinguished for defining the concept? Next to this, the various loyalty measures are reviewed, which concentrates on sub-question 2: how can brand loyalty be measured?

Furthermore the various antecedent variables of attitudinal loyalty are reviewed. The focus of this part of the chapter is on sub-question 3: which variables predict attitudinal loyalty? The chapter concludes with a discussion regarding the importance of segmentation in general and loyalty segmentation in particular. This discussion is followed by a loyalty segmentation based on the behavioural and attitudinal component and concentrates on sub-question 4: how can loyalty segments be classified?

To finalise this subject, several possible development strategies regarding the different loyalty segments are discussed.

2.2 Definition of brand loyalty

In the marketing literature the term loyalty has often been used interchangeably with its operational definition like: repeat purchase, preference, commitment, retention or allegiance. In addition, loyalty has been referred to in a variety of market-specific contexts, for example store loyalty, service loyalty and vendor loyalty, and contexts that reflect the unit of measurement: customer loyalty and brand loyalty (Bennett and Rundle-Thiele, 2002). This study refers to the context in which it takes place, as it researches the extent of brand loyalty of the hairstyling consumers.

The concept of brand loyalty has been all but uniquely defined and operationalised in the marketing literature. The diverse definitions of brand loyalty are due to the fact that brand loyalty is a very complex concept. However, most researchers agree that brand loyalty consists of two dimensions:

behavioural loyalty and attitudinal loyalty (e.g., Chaudhuri and Holbrook, 2001). Behavioural loyalty

relates to behavioural intentions to continue purchasing the same product or service. Attitudinal

loyalty relates to the feelings consumers have towards a product, service or organisation (e.g.,

Srinivasan et al., 2002).

The present authors argue that the concept of brand loyalty should depend on both market types and situations. Distinguishing between market types is important, as it is the market that indicates the antecedent variables of brand loyalty as well as the measures that should be used (Bennett and Rundle-Thiele, 2002). The hairstyling market can be classified as a fast moving consumer goods market. The difference in brand loyalty between a fast moving consumer goods market and a service market is that in a service market the degree of sole loyalty is higher. Fast moving consumer goods markets exhibit the characteristic of divided loyalty, which is commonly referred to in the marketing literature as multi-brand purchasing or multi-brand loyalty (Rundle-Thiele and Bennett, 2001).

The definition of brand loyalty, which is most often used in brand loyalty research and that was the first and most accepted definition, is the composite definition of Jacoby and Chesnut (1978).

Definitions that arouse later in the literature are very much influenced by this definition. All the important elements of the definitions discussed here after, are included in it. Because of these reasons, this study chooses to use the definition of Jacoby and Chesnut as well, which is as followed:

“Brand loyalty is the biased (i.e., non-random), behavioural response (i.e., purchase), expressed over time, by some decision-making unit, with respect to one or more alternative brands out of a set of such brands, and is a function of psychological (decision-making, evaluative) processes”

(Jacoby and Chesnut, 1978: 80)

The definition contains six important elements (Jacoby and Chesnut, 1978: 80):

1. The biased (i.e., non-random)

If brand loyalty was a random event, there would be no purpose in making it the object of applied scientific inquiry. This element of the definition refers to the deterministic approach (see paragraph 2.3).

2. behavioural response (i.e., purchase)

Only verbal reports of bias or intention of purchase are insufficient for defining brand loyalty. Such loyalty requires the statements of bias to be accompanied by biased purchasing behaviour.

3. expressed over time

The term loyalty suggests a condition of some duration as loyalty can only be measured over a longer

time period (where more than one purchase is done).

4. by some decision-making unit

The phrase “decision-making unit” implies that the decision maker does not have to be (a) the user or the purchaser of the product, although he or she probably is or (b) an individual, but can be a

collection of individuals. However, in this research it is presumed that the decision maker is the user as well as the purchaser of the product and that it concerns one individual. This since, it is very difficult to research the relationship between attitude variables and buying behaviour when the decision maker is not the user or purchaser. Accordingly, in this research loyalty is measured at individual level, based on the micro approach (see paragraph 2.3).

5. with respect to one or more alternative brands out of a set of such brands

Brand loyalty involves selecting one or more brands out of a set of brands, which has important implications. First of all, it recognises that individuals can be and frequently are multi-brand loyal, which is usually the case in the hairstyling category as mentioned before. Second, brand loyalty is essentially a relational phenomenon as it describes preferential behaviour towards one or more alternatives out of a larger set of brands.

6. and is a function of psychological (decision-making, evaluative) processes

The last element shows that brand loyalty is a function of decision-making and evaluative processes.

It reflects that in a purchase decision, the various brands are psychological (perhaps even physically) compared and evaluated on certain criteria after which the optimal brand(s) is (are) selected. Optimal is here defined in the sense of being the most rewarding. As a result of the decision-making and evaluative processes, the individual develops a degree of commitment towards the selected brand.

One of the possible results of commitment is attitudinal loyalty.

Other authors have defined the concept of brand loyalty in a different way. For example, Chaudhuri and Holbrook (2001) who divide the definition of brand loyalty into two separate ones: purchase loyalty and attitudinal loyalty. Purchase loyalty is defined as “the willingness of the average consumer to repurchase the brand” and attitudinal loyalty is defined as “the level of commitment of the average consumer towards the brand”. Their definition consists of both a behavioural dimension and an attitudinal dimension.

According to Arens (1999: 136) brand loyalty can be defined as “the consumer’s conscious or

unconscious decision – expressed through intention or behaviour – to repurchase a brand continually”.

In his definition, Arens makes clear that intention as well as behaviour can be an indication of loyalty.

As intentions are normally spoken conscious, it is remarkable that unconscious behaviour is regarded

With this addition, Arens acknowledges that attitudes are also important regarding loyalty, in spite of the fact that this does not appear in the definition itself.

Oliver (1999) defines brand loyalty as “a deeply held commitment to re-buy or re-patronise a

preferred product or service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts potential to cause switching behaviour”. This definition also emphasises the behavioural and attitudinal component of brand loyalty. Conspicuous is that Oliver relates brand loyalty to the situational influences and marketing efforts of competitors in order to stress the non-switching behaviour.

Waarts et al. (1995: 81) define brand loyalty as “the intention of which or the extent to which a consumer wants to buy or keeps on buying a certain brand, in spite of possible changes regarding the brand or competitors’ brands”. Moreover they state: “it is a matter of non-random buying behaviour of consumers who buy the same brand every time during a longer period of time”. Like Oliver (1999), Waarts et al. also stress that the loyalty to a certain brand is related to the brands of the various competitors. Furthermore the non-random and the value of the longer time period are emphasised as well.

2.3 Approaches of defining brand loyalty

Since the beginning of the research on brand loyalty, a great number of different approaches have been developed in order to study this concept. Bloemer (1993: 28) has tried to structure the various approaches by making a distinction based on the following three considerations:

1. Micro versus Macro approach

2. Stochastic versus Deterministic approach 3. Behavioural versus Psychological approach

1. Micro versus Macro approach

Brand loyalty can be measured at a micro and at a macro level. An approach based on the micro level explains brand loyalty on the level of the individual consumer. It is explicitly presumed that brand loyalty exists and that it can be measured and explained at an individual level. When using the macro level approach, it is presumed that brand loyalty exists and that it can be measured across a number of consumers at an aggregate level (Bloemer, 1993: 28; Jacoby and Chesnut, 1978: 8).

Since the goal of this research is to measure the brand loyalty of the individual consumer, this

research chooses for the micro approach.

2. Stochastic versus Deterministic approach

When brand loyalty is seen as a result of a stochastic process, the basic assumption is that brand loyalty is due to a chance factor. At the core of this approach is the suggestion of a strong random (i.e., purely chance) component that underlies basic changes in the market structure. The

deterministic approach on the other hand, assumes the existence of one or some limited number of causes. It suggests that repeated purchases of the same brand by the same consumer do not just happen; rather, they are the direct consequence of something underlying the consumer’s behaviour (Bloemer, 1993: 28).

This research chooses for a deterministic point of view because of the belief that brand loyalty can be explained according to some clear visible factors (determinants) and that it is not based on some random factors.

3. Behavioural versus Psychological approach

The behavioural approach uses only (observable) behaviour in order to explain brand loyalty. On the contrary, the psychological approach indicates that attitude factors, on which behaviour is based, should be used to explain brand loyalty. It is also possible to combine the behavioural and attitudinal factors to explain brand loyalty (Bloemer, 1993: 28; Jacoby and Chesnut, 1978: 9). Using both factors in a loyalty definition substantially increases the predictive power of loyalty and has been applied and supported as a valuable tool to understand the concept in several fields (Bowen and Chen, 2001).

This study focuses on actual behaviour as well as on attitude since the relationship between actual behaviour and attitudes is of great importance (e.g., Dick and Basu, 1994). When taking both

dimensions into account, the reasons for the observed behaviour are revealed, which provides a more elaborated perspective and allows making a distinction between true brand loyalties and repurchases.

Next to this, the validity of the research increases and the research is more thorough.

2.4 Measuring brand loyalty

As the focus of this brand loyalty research is on actual behaviour and attitude, behavioural as well as

attitudinal measures are used in order to measure the extent of brand loyalty. Behavioural measures

measure the behavioural loyalty of the hairstyling consumer while attitudinal measures measure the

attitudinal loyalty of the hairstyling consumer. It must be remarked that there is no agreement in the

marketing literature on how loyalty should be measured and therefore many measures exist (Bennett

and Rundle-Thiele, 2002). This study tries to structure the measures that were mentioned most often

in the literature.

2.4.1 Behavioural measures

More than 60 percent of the measures available in loyalty research are behavioural in orientation; that is, they are based either on the actual purchasing behaviour of the consumer or on his or her report of that behaviour (Jacoby and Chesnut 1978: 35). These measures simply estimate frequencies with no examination of the reasons for a particular purchase or the factors that may have influenced the choice (e.g., Rundle-Thiele and Mackay, 2001).

The behavioural loyalty measures proposed in the literature can be subdivided into the following three groups:

1. Proportion of purchase measures 2. Sequence of purchase measures 3. Probability of purchase measures

1. Proportion of purchase measures

Proportion of purchase measures are concerned with the proportion of purchase devoted to a given brand. Some of these measures mentioned by Jacoby and Chesnut (1978: 35) are:

• Exclusive purchase – Brand loyalty exists for a consumer who repetitively purchases a single brand.

• Market-share concept – Loyalty is defined in terms of the percentage of total purchases devoted to the single most frequently purchased brand. The buyer is said to be brand loyal when this percentage exceeds 50 percent.

• Hard-core criterion – This is similar to the market-share concept except that it adopts a higher cut-off point, namely 75 percent.

• Dual brand loyalty – Loyalty is defined in terms of the percentage of total purchases devoted to the two most frequently purchased brands.

Some examples of proportion of purchase measures mentioned by other authors are:

• Share of customer – The share that a brand represents in all purchases made by a consumer in a product category (e.g., Franzen and Bouwman, 1999: 333).

• Share of (category) requirement – The share that a brand represent in all purchases made by a consumer in a product category (e.g., Rundle-Thiele and Bennett, 2001).

• Share of purchases in the category – The share a brand represents in all purchases made by a consumer in a product category (e.g., Jones and Sasser, 1995).

These measurements measure the same but are named differently by the several authors and are

comparable to the market-share concept of Jacoby and Chesnut (1978).

2. Sequence of purchase measures

Sequence of purchase measures are concerned with the sequence in which brands are purchased.

Some of these measures discussed by Jacoby and Chesnut (1978: 36) are:

• Divided loyalty – Loyalty exists when the purchase sequence alternates between two brands (A and B) in the following manner: ABABABAB and so on.

• Unstable loyalty – Loyalty is defined to exist whenever a consumer consistently buys one brand during a certain time period and then switches to consistently buying another brand (e.g., AAABBB).

• Three-in-a-row criterion – Loyalty exists for a brand whenever a sequence of three or more consecutive purchases of that brand is made.

Some examples of sequence of purchase measures indicated by other authors are:

• Times a brand is bought in a row – The more often a brand is bought in a row, the more likely it is that a consumer is a loyal consumer (e.g., Waarts et al., 1995: 81).

• Length of time spend with a brand – The longer the time is that is spend with a brand, the more likely it is that it concerns a loyal consumer (e.g., Rundle-Thiele and Bennett, 2001).

3. Probability of purchase measures

Probability of purchase measures reflect the probability that a purchase will take place. Some examples of these measures discussed by Jacoby and Chesnut (1978: 37) are:

• Repeat purchase probability – Loyalty is here defined as the relative frequency of purchases devoted to a specific brand during a set of previous purchases.

• Return purchase probability – Loyalty is defined by the relative frequency of returning to the first brand on the next purchase trial.

Most of the behavioural loyalty measures require more than one measurement of the actual

purchasing behaviour during a certain time period. However, because of time restraints and

unavailability of scanner data, this study is limited to measure behavioural loyalty at one moment in

time and to base it on self-reported data on past purchase behaviour.

2.4.2 Attitudinal measures

As discussed, this research not only looks at the buying behaviour of consumers but also at the reasons behind this buying behaviour, also known as the attitude of the consumer. The rationale underlying most of the attitudinal measures is that, while behavioural measures of brand loyalty may provide satisfactory prediction of subsequent behaviour, they are incapable of offering an

understanding of the factors underlying (i.e., causing) the development and modification of brand loyalty. Attitudes are considered to be the psychological construct most capable of providing such explanations.

Attitudinal loyalty represents the individual’s feelings towards the company, and is a key driver of behavioural loyalty. The greater the attitudinal loyalty to a brand, the more a consumer usually buys.

A meta-analysis of 88 attitude-behaviour studies revealed that attitudes significantly predicted future behaviour (Bennett and Rundle-Thiele, 2002). However, consumers with a positive attitude towards a brand may decide not to buy it, depending on factors such as cost, alternatives or convenience.

Furthermore, repurchase behaviour can also exist with a negative attitude towards the brand when the repurchase is the result of habit (e.g., Hallberg, 2004). However, attitudinal loyalty is an important construct as a consumer with a more favourable attitude is more likely to stay loyal in the long-term (Drake et all, 1998). According to Baldinger and Rubinson (1996), attitudinal loyalists are almost three times as likely to remain loyal to the brand.

One method in order to obtain an indication of the attitudinal loyalty, is measuring the behavioural intentions of consumers. When gaining a better insight into the behavioural intentions, it is possible to do predictions regarding attitudinal loyalty. Zeithaml et al. (1996) developed a “Behavioural-Intentions Battery” based on previous research. It includes five behavioural intentions in order to capture the attitudinal loyalty of the consumer:

• Say positive things about the brand to other people

• Recommend the brand to someone who seeks your advice

• Encourage friends and relatives to buy the brand

• Consider the brand to be your first choice when buying products in a certain product category

• To continue to buy the brand in the next few years

2.5 Predictors of attitudinal loyalty

Satisfaction, commitment and image are mentioned most often as antecedent variables of attitudinal

loyalty in the literature. In this paragraph the different variables are defined and their relationship with

brand loyalty is discussed. Furthermore the relationships between the various (in)direct antecedent

variables are reviewed.

2.5.1 Satisfaction

Satisfaction has been defined in many ways by several researchers over the years. Most researchers see satisfaction as an attitude or evaluation, which is formed by consumers who compare their pre- purchase expectations of what they would receive from the product with their subjective perceptions of the performance they actually did receive (Drake et al., 1998). For example, Bloemer (1993: 61) defines satisfaction as “the result of a subjective evaluation of the chosen alternative (product/brand) and whether this result is similar to the expectations of the subject of that alternative or whether it succeeds his or her expectations”. Oliver (1997: 13) is in his definition of satisfaction more specific about the way that the consumer experiences the consumption. He states that a consumer feels that the consumption fulfils certain needs and goals in a pleasant way. His definition of satisfaction is “a judgement that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfilment, including levels of under- or over fulfilment”.

Satisfaction is operationalised according to the following principle: expectation – experience – perception. The Expectancy-Disconfirmation theory, which is shown in figure 2.1, explains this principle well. This theory is very dominant in the satisfaction literature and is in line with the view that most authors have regarding satisfaction. The theory indicates that the expectancies of the product, the product itself and the positive confirmation/disconfirmation are all of direct and positive influence on the extent of satisfaction that a consumer experiences with a product. The expectancies as well as the product itself are also of indirect influence through the variable

confirmation/disconfirmation (Bloemer, 1993: 73). The theory predicts that satisfaction is achieved when expectations are fulfilled. Conversely, negative confirmation of the expectations results in dissatisfaction (Selnes, 1998).

This study is limited to measure the outcome of satisfaction or dissatisfaction (perception). The preceding process (expectation and experience) is not dealt with because of the limited time available for the research. Furthermore, this particular subject deserves another research where the focus is on customer satisfaction.

Figure 2.1 Expectancy-Disconfirmation theory (Bloemer, 1993: 73)

(Dis)confirmation

Expectancies of the product

Satisfaction Presentation of

the product

There is strong support in the literature that the level of satisfaction experienced by the customer directly affects the extent of loyalty of the customer. According to Delgado-Ballester and Munuera- Alemán (2001), being loyal is one way for customers to express their satisfaction with the

performance of the product or service. Jones and Sasser (1995) also indicate that except in a few rare instances, complete customer satisfaction is the key to securing loyalty. A study performed by Strauss and Neuhaus, (1997), shows that when customers are completely satisfied, they are less likely to switch brands, leading to the proposition that the intensity of satisfaction is an element in brand loyalty.

Finally, several authors discuss the type of the relationship between satisfaction and loyalty. Schijns (2000: 79) empirically argues that the relationship between dissatisfaction and switching behaviour is very strong and very linear. However, the relationship between satisfaction and loyalty is not linear but asymmetric as shown in figure 2.2 (e.g., Jones and Sasser, 1995). On the high side, when satisfaction reaches a certain level, loyalty increases dramatically; at the same time, when satisfaction declines to a certain point, loyalty drops equally dramatically. Therefore, satisfaction is not a

guarantee for loyal behaviour and managers should realise that having satisfied customers is not enough; they must have extremely satisfied customers (Bowen and Chen, 2001). Especially in a highly competitive market like the hairstyling market, completely satisfied customers are significantly more likely to repurchase products than simply satisfied customers (Jones and Sasser, 1995).

Figure 2.2 Satisfaction-loyalty relationship in the automobile market, which can be classified as a highly competitive market (Jones and Sasser, 1995)

Loyalty

Satisfaction

- -

+

+

2.5.2 Commitment

Commitment has also been defined in many different ways by researchers over the years. Morgan and Hunt (1994) define commitment as “the enduring desire to retain a valuable relationship”. This definition is more applicable to the service market however. Bloemer (1993: 102) defines commitment as “the extent to which a subject emphatically wants to hold on to a brand choice in a future purchase situation”. In this definition, it is the person itself who wants to hold on to its brand choice, which is referred to in the literature as affective commitment. In contrast calculative commitment exists when a customer is forced to remain loyal against his or her desire. Waarts et al. (1995: 364) use another comparable definition of commitment. They emphasise the consequences and risks associated with a purchase and define commitment as “the extent to which a (potential) buyer expects that the choice of and the purchase of a product or brand has important consequences and/or risks for him or her”.

Various authors discuss the relationship between loyalty and commitment. Pritchard et al. (1999) argue that the principle evidence of commitment, resistance to change, is central to the outcome of brand loyalty. Bloemer (1993: 90) explains the relationship between loyalty and commitment by making a distinction between inertia loyalty and true brand loyalty (see figure 2.3). Inertia loyalty can be defined as repurchasing a brand based on habit without any thorough evaluation or brand

commitment either due to a lack of consumer motivation, capacity or both. Hence, inertia loyalty may be easily disrupted by attractive competing product offers. On the contrary, true brand loyalty is more than only the repurchasing of a brand. True brand loyalty can be defined as repurchasing a brand based on commitment to that particular brand. The consumer considers it as important to repurchase the same brand and wants to hold on to its brand choice (Bloemer, 1993: 91). Day (1969) confirms to this. He indicates that true brand loyalty is based on a rational decision made after an evaluation of the benefits of competing brand. This rational decision is, in effect, a commitment to the brand.

Furthermore Day adds that the commitment is never total and that the decision is reviewed when competitive or other circumstances change.

Figure 2.3 Relationship commitment and brand loyalty (Bloemer, 1993: 90)

commitment No Purchase a

product again

Inertia loyalty

Commitment Purchase a

product again

True brand

loyalty

2.5.3 Image

Nijhof (1999: 23) makes a distinction between three main types of image:

• Monolithic image: when a company has a monolithic image, a company presents itself according to one single image.

• Endorsed image: a company has an endorsed image when various company or brand names are used together with the name of the mother company.

• Brand image: when a company has a brand image, the brand name of the products determines the image. The customers often do not even know or barely know the name of the organisation.

As the brand names of the hairstyling products of S&H (Taft, Junior Powerstyling, Junior, Gliss Kur Styling) determine the image of the products, this study refers to brand image. Even though Schwarzkopf is communicated on every hair product (hair care, hairstyling, hair colorations) as well, Schwarzkopf does not determine the image of the various products. Furthermore, the customers do not or barely know the name of the mother company (Henkel).

According to Andreassen and Lindestad (1998), brand image is seen as an attitude, which is based on the experience of the customer and/or (in)direct market communication. They define image as “an outcome from accumulated attitude derived from experience and/or direct or indirect market

communication”. Herbig and Milewicz (1993) define brand image as “the estimation of the consistency over time of an attribute of an entity”. This estimation is based on the willingness and ability of the brand to perform an activity (e.g., price or quality) the same way every time.

In the literature the relationship between image and loyalty is discussed various times. This

relationship seems to be quite strong, especially regarding fast moving consumer goods (Zins, 2001).

There are various views regarding this relationship.

Several authors (e.g., Nguyen and LeBlanc, 1998) indicate that image is of direct influence on loyalty.

Furthermore, Selnes (1993) advocates that image should be incorporated into the explanation of loyalty together with satisfaction as both variables are of direct influence on loyalty. Also according to Fredericks and Salter (1998), the image of the brand should be consulted in order to gain further insight into the development of loyalty towards a brand. They point out that image can support or undermine the value that customers believe they are getting and therefore, image can affect loyalty.

Gounaris and Stathakopoulos (2004) finally indicate that having a brand with a strong image is a significant positive factor in the formation of brand loyalty since the brand’s image can strengthen its perceived equity.

There are also authors who assume an indirect relationship between image and loyalty like Delgado-

Ballester and Munuera-Alemán (2001). They see image as a mediating variable between satisfaction

and loyalty and indicate that there is an indirect relationship between image and loyalty.

Andreassen and Lindestad (1998) explain why image is important in the explanation of loyalty. They argue that when intrinsic cues (e.g., product attributes) have low predictive value or the customer has low confidence in the evaluation of those, extrinsic cues (e.g., image) will be consulted more

intensively. Positive experience over time will ultimately lead to positive image and preference.

2.5.4 Relationship between predictors attitudinal loyalty

The relationships between the various (in)direct antecedent variables of attitudinal loyalty are discussed according to the following figure. Each number represents a relationship between two variables.

Figure 2.4 Relationships predictors attitudinal loyalty

1. (Perceived) Quality Æ (Perceived) Value

Perceived quality is the quality perception that a consumer has of a brand. Perceived quality is of direct positive influence on perceived value, which is again of indirect influence on loyalty (e.g., Nguyen and LeBlanc, 1998; Zins, 2001; Delgado-Ballester and Munuera-Alemán, 2001).

(Perceived) Quality

(Perceived)

Value Trust Involvement

Satisfaction

Image Commitment

1

2 3

4

5 6 7

8

Attitudinal Loyalty

2. (Perceived) Value Æ Image

According to Zins (2001), perceived value can be conceptualised as “the result of the customer’s trade-off between quality perception and the monetary and non-monetary sacrifices”.

Nguyen and LeBlanc (1998) found that the image of a brand could be enhanced through value. In turn, image is found to have a direct impact on loyalty. Furthermore, Barich and Kotler (1991) argue that a brand will have a strong image if customers believe that they are getting high value when they buy it.

3. (Perceived) Value Æ Satisfaction

Zins (2001) assumes that in the post-purchase situation, where extensive product experience is available, the influence of (perceived) value on loyalty will be partly or fully mediated by customer satisfaction. The result of the value-satisfaction-loyalty link suggests that a product provider should spend its effort on improving the value perceived by the customers in order to enhance satisfaction and to obtain loyalty (Lam et al., 2004). Jones and Sasser (1995) indicate that providing customers with outstanding value may be the only reliable way to achieve sustained customer satisfaction.

4. Trust Æ (Perceived) Value

Morgan and Hunt (1994) conceptualise trust as existing “when one party has confidence in an exchange partner’s reliability and integrity”. Chaudhuri and Holbrook (2001) define trust as “the willingness of the average consumer to rely on the ability of the brand to perform its stated function”.

The relationship between trust and (perceived) value is explained by the fact that trust represents the recognition of the consumer that value can be created and developed by the brand (Delgado-Ballester and Munuera-Alemán, 2001).

5. Satisfaction Æ Trust

Satisfaction positively influences trust. Customer satisfaction with a brand forms a prerequisite for the development of trust in the provider. Whereas satisfaction basically reflects the “shadow of the past”, for example the evaluation of past performances and outcomes in the present, trust reflects the

“shadow of the future”, since trust reflects faith or optimist expectations concerning the future behaviour of the other party. Therefore, satisfaction precedes the development of trust and moreover trust in general (Willenborg, 2001: 93).

Delgado-Ballester and Munuera-Alemán (2001) also consider satisfaction as being an antecedent of

trust. According to them, the process in which an individual develops trust in the brand is based on his

or her experience with that brand. As an experience attribute, it is influenced by the consumer’s

evaluation of any direct and indirect contact with the brand of which the consumption experience

gains more relevance and importance as a source of trust. So in this sense, overall satisfaction

generates trust.

6. Trust Æ Commitment

The Commitment-Trust theory of Morgan and Hunt (1994) indicates that the trust in a brand

influences the commitment to that brand. Relationships characterised by trust are valued so high that the parties are willing to commit themselves to such relationships. The higher the trust in the brand, the higher the commitment to the brand is. This effect of trust on commitment is especially true in situations of high involvement (Delgado-Ballester and Munuera-Alemán, 2001). They furthermore indicate that in the customer-brand context, trust may be an important contributor to the kind of emotional customer commitment that leads to long-term loyalty.

7. Involvement Æ Commitment

Bloemer (1993: 104) defines involvement as “the level of interest of a subject in an object”.

The consumer’s involvement or the personal relevance of a good or service influences the likelihood and amount of elaboration in information processing which leads to commitment. The concepts of involvement and commitment are very much alike. The difference between them is based on the fact that involvement with an object is the result of important values and self-concepts of a person in a decision process while commitment does not exist until values, self-concepts and important attitudes are connected with a specific choice (Bloemer, 1993: 111).

Brand loyalty can occur for both low and high involvement consumers. In the low-involvement case, brand loyalty can arise because a consumer found a brand that works and does not want to expend the effort to find anything better. In the high-involvement case, brand loyalty is the result of a well- thought-out evaluation of brands (Blattberg and Neslin, 1990).

8. Commitment Æ Satisfaction

The literature also identifies a relationship between commitment, satisfaction and loyalty. Bloemer

(1993: 95) explains this relationship by making not only a distinction between true brand loyalty and

inertia loyalty but also between manifest and latent satisfaction (figure 2.5). In the case of true brand

loyalty, an elaborate process of brand or product evaluation takes place, which leads to commitment

as discussed. Besides this, the thorough evaluation also leads to so-called manifest satisfaction, which

in turn motivates repurchase behaviour. In case of inertia loyalty, no or hardly any evaluation takes

place which leads to no commitment and to so-called latent satisfaction. Latent satisfaction in turn

leads to repurchases based on habit.

Figure 2.5 Loyalty model (Bloemer, 1993: 97)

2.6 Loyalty segments

2.6.1 Segmentation

Boekema et al. (1989: 109) define segmentation as “classifying the market, which consists of heterogeneous buyers, into groups of homogenous buyers”. A market consists of buyers and buyers differ in one or more ways. They may differ in for example their wants, resources, locations, buying attitudes or buying practices. Because buyers have unique needs and wants, each buyer is potentially a separate market. Ideally then a seller might design a separate marketing strategy for each buyer.

However, most sellers face large numbers of small buyers and do not find complete segmentation worthwhile. Instead, they look for segments of buyers who are similar in their product needs or buying response and in this way develop the groups of homogenous buyers (Kotler and Armstrong, 1996: 237).

Segmentation is very important with regard to the marketing mix. When a market has been divided into various segments, a company can choose one or more target segments to focus on with its adjusted marketing mix (Boekema et al., 1989: 132). In this way, the seller can present the right offers to each target segment and can reach them more efficiently and effectively (Kotler, 1988: 280).

No evaluation

(No commitment) Maximum evaluation

(Completely commitment)

Latent

Satisfaction Manifest

Satisfaction

Inertia

Loyalty True brand

Loyalty