Monday, October 19, 2009

Impact of attitudinal and behavioural loyalty on future purchase intentions in cross-cultural context

Companies across the world recognize the importance of customer satisfaction and loyalty. The results of higher satisfaction in most cases are positive word-of-mouth and repeat purchase. This has direct impact on firm performance in terms of sales and profits as well as firm valuation. While the task of satisfaction in a single market is dynamic enough, the issue becomes highly complex in cross-cultural context. In such market situations, customer satisfaction and resultant loyalty can make or brake a company.

Researchers argue on two distinct theoretical steams with regard to customer satisfaction. On the one hand, researchers argue that customer satisfaction occurs when a product or service meets prior expectations of consumers. However, on the other hand, researchers give more importance to the experience and feelings evoked by the product or service and its relationship to satisfaction. One thing however is fairly clear that both these strands suggest that the impact of customer satisfaction and loyalty on future buying behaviour is significant.

Researchers suggest two separate dimensions of loyalty which affect satisfaction. Firstly, 'behavioural loyalty' is associated with the level and amount of past purchase activities. Secondly, 'attitudinal loyalty' is reflected in consumer's attitude towards a product or service. Several researchers suggest that behavioural loyalty precedes attitudinal loyalty. However, others argue that the two constructs merge and create a larger single loyalty constructs. Furthermore, researche in this area has mostly focused on Western developed nations and there is a need for focusing on the rapidly developing emerging markets such as the BRIC countries.

One such study was conducted by Broyles in 2009 focusing on the US and China as representative countries with a final sample containing 236 Chinese respondents and 224 from the US. Coca-Cola and KFC were the brands eventually chosen because of their widespread availability and leading brand status in both countries. It was also noted that the Coca-Cola and KFC have “dissimilar complexity and consumer involvement” in relation to the service provision from employees to customers.

The results provide interesting insights. It was clearly observed that both the loyalty constructs are separate in nature. Furthermore, a contrasting results was observed wherein attitudinal loyalty was found to be preceding behavioural loyalty rather than what is being suggested in prior literature. This is striking result and may require further studies to support the notion. It was also observed that, the nature of the directive relationship between attitudinal loyalty and behavioural loyalty indicates that behavioural loyalty likewise does not influence an individual's feelings toward a product and their future intention to purchase or not.

Companies such as Coca-Cola may find better results if they focus on behaviour loyalty. However, other food companies such as KFC may be better off focusing on their emphasis on behavioural loyalty in developed markets while using attitudinal loyalty in emerging markets. There is a possibility of replicating such studies in other market and industry contexts.

There is also a great research opportunity in measuring the impact of loyalty on satisfaction.
While a lot of earlier research has focused on impact of satisfaction on loyalty, the resultant impact of loyalty on satisfaction has not been studied in same details by researchers. Most researchers assume the single purchase situation. This is mostly due to prominence of cross-sectional research in the field of marketing and international marketing. However, one has to remember that consumers don't engage with a product or service once only and therefore the multiple engagement which could lead to higher loyalty may have a different level of satisfaction associated with it.