Chapter III Methodology
3.2 Hypotheses
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3.2 Hypotheses
Grounded on the literature reviews of previous studies, the study proposes seven hypotheses, which investigate the relationship among perceived value, brand image, customer satisfaction, and customer loyalty. Demographic variables and personal characteristics are also concerned. The basis of each hypothesis is explained as follows:
The Relationship between Brand Image and Perceived Value
Fredericks and Slater (1998) considered image of a brand or company as an important element for the customer value, and therefore affect customer loyalty as well. LeBlanc and Nguyen (1999) conducted a study on college students and found that the image of school had a direct impact on their perceived value of school. Maklan and Knox (1997) argued that customer value can be increased by the improvement of brand image including enhancing the product functionality and quality and creating the prestige and status for the owner of the brand. Grewal, Monroe, and Krishnan (1998) also suggested that brand name is positively correlated to the customers’ perceived quality, and further increases their perceived value afterwards. Recapitulating from the previous findings, this study proposed the first hypothesis as follows:
H1: Brand image has a significantly positive impact on perceived value of customers.
The Relationship between Brand Image and Customer Satisfaction:
Bloemer and de Ruyter (1998) studied the retail settings and manifested that positive store image leads to greater level of satisfaction. Blackston (2000) examined the components for the long-term and positive relationship between corporate image and customers. His study evidenced that a favorable image enhances its dependability and
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trust, and therefore results in satisfaction. Abdullah, Nasser, and Husain (2000) studied the relationship between satisfaction and loyalty via consumers’ evaluation for their preferred cell phone brand. They found that customers’ satisfaction level is positively influenced by their perceived brand image. Based on these study results, the study proposes the second hypothesis as follows:
H2: Brand image has a significantly positive impact on customer satisfaction.
The Relationship between Brand Image and Customer Loyalty:
Osman (1993) proposed a model for articulating the relationship between store image and customer loyalty and noted that both positive store image and purchase experiences in the past among customers cause their loyalty patronage behavior.
Andreassen and Lindestad (1998) contended that brand image impacts intended customers in the future, which also indicates the credence quality of a firm is the key for the repatronage. Study conducted by Martenson (2007) evidenced the impact of the brand image on customer satisfaction and loyalty in grocery retailing. According to the previous research, the study proposes the third hypothesis as follows:
H3: Brand image has a significantly positive impact on customer loyalty.
The Relationship between Perceived Value and Customer Satisfaction:
Fornell et al., (1996) introduced American Customer Satisfaction Index (ACSI) and suggested that perceived value is the determinant of customer satisfaction. Cronin, Brady, and Hult (2000) investigated six different service industries and their finding indicates that both customers’ perceptions on service quality and service value result in satisfaction. McDougall and Levesque (2000) noted that corporates should more
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carefully assesse perceived value from customers for a more effective examination of their satisfaction. On the basis of the previous studies, the study proposes the fourth hypothesis as follows:
H4: Perceived value has a significantly positive impact on customer satisfaction.
The Relationship between Perceived Value and Customer Loyalty:
Dodds, Monroe, and Grewal (1991) considered a positive relationship exists between consumers’ perceived value and their intention to purchase or repurchase. Ravald and Grönroos (1996) argued that by increasing the benefits or reducing the sacrifice for customers their perceived value will be enhanced, and thus leads to loyalty. The study conducted by Parasuraman and Grewal (2000) on service quality also gains insights on the effect of perceived value for it is increased as service quality is improved, and eventually contributes to loyalty. Yang and Peterson (2004) suggested that companies which strive for loyal customers should focus on their satisfaction and perceived value since not only the price but the cost of product or service affects the overall evaluation of customers. In light of the past studies, the study proposes the fifth hypothesis as follows:
H5: Perceived value has a significantly positive impact on customer loyalty.
The Relationship between Customer Satisfaction and Customer Loyalty:
Anderson and Sullivan (1993) stated that the key for the retention of customers is high level of satisfaction for it is directly related to customers’ intention for repurchase.
Bearden and Teel (1983) assumed that marketers should pay more attention on customer satisfaction because it is a significant indicator for repetitive purchase,
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favorable word of mouth and consumer loyalty. Bloemer and Poiesz (1989) contended that “satisfaction can be thought of as an important determinant of brand loyalty.”
Empirical findings from LaBarbera and Mazursky (1983) revealed that brand loyal customers are less likely to switch brands due to higher levels of satisfaction. Based on the previous studies, the study proposes the sixth hypothesis as follows:
H6: Customer satisfaction has a significantly positive impact on customer loyalty.
The Difference among Demographic Variables and each Construct:
Many studies offer some evidence that consumers can be characterized by variables such as age, income, level of education, social participation for better capturing their consumption behaviors (Im, Bayus, Mason, 2003). Kotler (2003) considered geographic, demographic, psychological, and behavioral variables as indicators for analyzing decision making in consumer research. Bennett and Rundle-Thiele (2004) specifically noted that the relationship between satisfaction and loyalty is moderated by personal characteristics such as demographic variables and other factors. Concerning the reviews of the previous studies, the study proposes the seventh hypothesis as follows:
H7: There are significant differences among brand image, perceived value, customer satisfaction, and customer loyalty on different demographic variables.
H7-1: There is significant difference among consumers with different genders on brand image, perceived value, customer satisfaction, and customer loyalty.
H7-2: There is significant difference among consumers with different ages on
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brand image, perceived value, customer satisfaction, and customer loyalty.
H7-3: There is significant difference among consumers with different marital statuses on brand image, perceived value, customer satisfaction, and customer loyalty.
H7-4: There is significant difference among consumers with different residential area on brand image, perceived value, customer satisfaction, and customer loyalty.
H7-5: There is significant difference among consumers with different levels of education on brand image, perceived value, customer satisfaction, and customer loyalty.
H7-6: There is significant difference among consumers with different occupations on brand image, perceived value, customer satisfaction, and customer loyalty.
H7-7: There is significant difference among consumers with different monthly incomes among individuals on brand image, perceived value, customer satisfaction, and customer loyalty.
H7-8: There is significant difference among consumers with different purchase channels on brand image, perceived value, customer satisfaction, and customer loyalty.
H7-9: There is significant difference among consumers with different purchase frequencies on brand image, perceived value, customer satisfaction, and customer loyalty.
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