The Effect of Antecedent Variables on Brand Loyalty Intentions in Context of Mobile Service Industry of Pakistan

Effect of Customer Equity Drivers on Brand Loyalty Intentions

Academic Paper, 2018

72 Pages, Grade: 4.0



Chapter 1
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Question
1.5 Significance of the Study
1.6 Limitations and Delimitation of the Study
1.7 Operational Definition of Key Terms
1.7.1 Customer Equity
1.7.2 Customer Equity Drivers (CEDs)
1.7.3 Value Equity
1.7.4 Brand Equity
1.7.5 Relationship Equity
1.7.6 Perceived Brand Value
1.7.7 Brand Image
1.7.8 Brand Loyalty

Chapter 2 Literature Reviews
2.1 Introduction
2.2 Theoretical background
2.2.1 Brand equity
2.2.2 Value equity
2.2.3 Relationship equity
2.2.4 Perceived brand value
2.2.5 Brand image
2.2.6 Brand loyalty intention
2.3 Review of Related Studies
2.3.1 The link between Customer Equity Drivers and Brand Loyalty Intentions
2.3.2 The links between Brand Image and Brand Loyalty Intentions
2.3.3 The links between Perceived Brand Value and Brand Loyalty Intentions
2.4 Empirical Studies
2.5 Model Hypothesis:
2.6 Summary of the chapter

Chapter 3 Methodology
3.1 Methodology
3.2 Research Approach
3.3 Research Purpose
3.4 Research Design
3.5 Target Population
3.6 Sample Size
3.7 Instrumentation:
3.8 Control for Measurement Error
3.9 Content and Face Validity
3.10 Data Collection Technique
3.11 Sampling Technique
3.12 Statistical Technique
3.13 Unit of Analysis
3.14 Operationalization and Measurement of Variables under Study
3.15 Model

3.16 Descriptive Variable
3.16.1 Brand Equity:
3.16.2 Relationship Equity:
3.16.3 Value Equity:
3.16.4 Brand Image:
3.16.5 Brand Perceived Value:
3.16.6 Brand Loyalty Intentions:
3.17 Ethical Consideration

Chapter 4 Data Analysis
4.1 Data Analysis
4.2 Demographic Profile of Respondents
4.3 Convergent Validity
4.4 Discriminant Validity
4.5 Structural Equation Model

Chapter 5 Conclusion
& Recommendations
5.1 Discussions
5.2 Conclusion
5.3 Recommendations:
5.4 Future Recommendations:


Appendix – A

Appendix –B

Chapter 1 Introduction


1.1 Background to the Study

Customer equity, this notion was first introduced by (Blattberg & Deighton, 1996) in which they argued that the companies and organizations should considered customers as their any other financial asset and like other financial assets they should also be measured and maximized by the management. Later (Rust et al., 2000) came up with the study on the same topic in more deeper perspective and states the definition of customer equity by uttering that, it is life time values which are discounted of the customers who belongs directly with the company and it is an outline which represents the main business of the firm that is their key business, which separates the identity of the company from others to its customers (Rust et al, 2000).

The customer equity drivers or retention equity drivers are consist of value, brand and relationship equity. These customers’ equity drivers be contingent upon, customer’s perception and attitude the brand. In terms of Value equity the customer’s perceptions and attitude represents the rational and unbiased situation of the service or a product, which is mainly grounded upon the perception and attitude of the customers towards price of the product or service, its quality and luxury that the customer can enjoy in the market availability of product and service (Rust et al., 2000). In terms of Brand equity the situation is other way around, brand equity shows the, personal as well as immaterial point of view of the customer and their attitude towards the available product and service in the market. The inner feeling and attitudes of the customer towards the company’s product or service are insubstantial, the brand equity shows the sensitive attachment of customer with the product or service and irrational situation of the market availability which associates the customer with the brand or position of the market. As discussed fact that the inner concept of customer towards brand or service, attitude and behavior are personal and insubstantial, the brand equity of the product or service inclines to illustrate the sensitive and neutral characteristics, through which customer makes his association or relationship with the brand or market, however this relationship can be influenced by the life experience of the customer and with the memories that customer have with in his mind about the brand (Rust et al., 2000). Relationship equity program or retention programs shows the relationship that the customer and firm have, mostly firms have relationship building programs also known as retention programs which is developed by the firm in order to established, build and maintain the strong relationship with the customers (Rust et al., 2000).

It is always convoluted task for the marketers in any organization, to build a strong image of the brand through which they can attract new customers. It is organization’s prime objective to enhance the customer retention ratio with long-term profitable relationship with the customers.

The company can retain the customer by giving satisfaction to the customers which they expect from the particular product or service offers by the company. The buyer satisfied with the claims makes by the company about their product or service makes the customer loyal, results into positive word of mouth, rebuying and also creates trust with the company. When there is higher level of loyalty by the customer with the company, it results into high market share and imply company to invest more in the betterment of their products and services (Schult, 2005).

In order to have better brand image successful organizations always concentrates on strategies that can results into high level quality service, moreover they also make sure about best competitive price of their product or service in the appropriate market place to appeal more customers. For having successful product or service as compare to other competitors present in the market, the marketer must have to enhance the symbolic value which is associated with the brand through which companies distinguishes their brand from other’s brand. It is built-in in the nature of buyer to compare the one’s product with other’s product and will be attracted to the brand who have better reputation among its competitors as well as that offers modest or competitive price for their products or service (Schult, 2005).

With the purchase of brand customer wants to fulfil their needs and wants which the customer expects before making the purchase on the basis of quality level of the product or service. Company successfully satisfied the customer by fulfilling the customers’ expectations it will raise the probability of rebuying. The customer will become loyal with the form or organization creates numerous advantages. It gives positive image of the company to the other buyers that the company has definitely done something good by completing the customers’ expectations that’s why they are still stick with the brand.

Appealing new customers is never easy task for the companies because it is expensive to run campaigns and to invest in advertisements and it is time consuming as well, so it is must for the companies to keep its patron same throughout by maintaining the long-term positive relations with the company helps the managers to enjoy the loyalty of the customers with the brand (Raimondo, Miccli, & Costabies, 2008). Those companies who have higher rate of loyal customers always prosper because it results into further gainful transactions, brand performance can be safely predicted by knowing the number of loyal customers, customers loyalty always have positive impact on the performance of the brand (Mannering & Wiston, 1991). Purchaser’s loyalty with the brand has very deep impact on the company’s share in the market (Chaudhuri and Holbrook, 2001). It has been argued by (Raju, Srinivasan and Lal, 1990) that those brands who have high level of customers’ loyalties, usually have fewer concerns related to the price promotion campaign and discounts as compare to the brands with new customers. Moreover, if we compare to brands on the basis of loyalty, the brand who have more loyal customers will have to pay less for promotion campaigns and advertisements, compare to the brand with weaker loyalties (Agrawal, 1996). It illustrates that the brand loyalty also stage vigorous role in the evolution of any organization.

1.2 Statement of the Problem

There has been consent among marketers as well as researchers that the competitive advantage can be achieved by any firm by having more loyal customers with their brand. There are numerous of studies which examined the benefit of customer focused brand loyal intentions and the potential of their intentions to achieve best results. It is very important for the marketers to know about the fact how can brand loyalty intentions of the customer can be used to enhance the perceived value of the customer. To date, the study of factors which enhance the brand loyalty intentions of the customers have dominated the service literature. The literatures center of considerations was from conceptual aspect as well as from operational aspect with specific intentions in order to identifying the relationships between the factors affection brand loyalty intentions of the consumers (Brady & Robertson, 2001).

The significance of brand loyalty has been acknowledged in every industry by the marketers as well as by the researchers. Brand loyalty is psychological commitment of buyer with the brand which means buyer committed to buy and recommend a particular brand without having any real purchase in account (Jarvis & Wilcox, 1976).

It has been observed in the previous studies, if the company successfully increase the retaining rate of its customers by 5%, it will be results into the profitable rate of 25% to 95% over 14 industries, the industries are credit card industries, brand deposits, software and credit card industries, auto service chains (Reichheld & Detrick, 2003; Reichheld & Sasser, 1990). There is a higher chance of brand recommendation in relative, friends and other people in their circle of customers and indirect promotion by the customers if the company successfully creates loyalty intentions by fulfilling the expected desires of the customers (Schultz, 2005).

There are many factors which is linked with brand loyalty. The brand’s effectiveness and brand’s trust relationship with customer can create a positive influence on behavior and attitudinal loyalty of the customer and on the other hand risk averse effect which results into change of loyalty by customers for the brand (Matzler, Kra’ura & Bidmon 2008). The attitudinal and behavioral loyalty has direct impact on brand equity and trust for the brand (Taylor, Celuch, & Goodwin, 2004).

Brand’s personality traits has significant relationship with trust, commitment and attachment but there impact on customer’s mind can be positive aspect or as negative aspect (Louis & Lombart, 2010). The brand loyalty has a negative impact of high price brand related to price deals (Swani & Yoo 2010), but for Low price brands, the brand loyalty has positive relation with price deals and promotion tactics. Brand loyalty has negative relation with high price (Rousan, Mohamad, & Fernando, 2011).

True brand loyalty occurs when customers rate the particular brand higher in comparison to others this attitude can be demonstrated through repurchase behavior of the customer. The repurchase behavior of the customer shows brand loyalty which is a huge asset, the reason is loyal customers are always ready to pay significantly higher prices for the product which satisfied their expected needs as well as also carry in customers in the company, through their recommendations in their social circle (Reicheld & Sasser, 1990). There is an several types of customer’s brand loyalty, there are certain customers who are loyal with just only single brand and there are certain loyal customers who are loyal with two or more than two brands, there is another type of customers who use to change their brand loyalty from one brand to another brand and some customers are merely not loyal to any brand.

If we talk about the brand loyalty in the mobile service industry we can have all types of customers, different users of the network associate themselves with different brands present in the mobile service industry. If a particular mobile service company announce mobile service with a more suitable package in terms of cost as well as attached with quality service then competitors have to introduce something similar or better than that with attached service quality. Any brand can get their business from their competitor, by attracting or convincing the user of the service who is not satisfied with his brand of current service provider because customers always looks for a change in order to have better service. There is a huge number of mobile service users along with the intense competition among the present mobile service companies in the industry competing each other, in order to take edge over one another. Mobile Service Companies can only maintain and have more brand loyal customers by having same patron and same quality of service throughout.

In context of Pakistani mobile service industry, currently there are five mobile companies who are providing their services i.e. Mobilink, Ufone, Telenor, Warid, and Zong (Malik, Ghafoor & Iqbal, 2012). Pakistan’s mobile service market is one of the fastest growing mobile service market having more than average growth rate. This unexpected growth and customer’s equity with the brands give rise to explore the factors of brand loyalty intentions of the customer’s in the telecommunication industry of (Pakistan Mobile Cellular Services, 2007). However, there is countless number of customers who are unsatisfied with their current service and can effortlessly shift their loyalties to another brand, marketers always have to develop and apply those strategies which keep their customers loyal with their brand because it is never easy to retain customers in intense competitive environment (Stone, M., Woodcock, N., and Machtynger, L., 2000), effective strategy by the management may assistance the brand to shape long term relationship with customers (Tseng, Y.M., 2007). In Pakistan, diverse tactics have been employed by researchers to create Brand loyalty of the customers (Hanif, Hafeez & Riaz, 2010).

In Pakistan due to the informal management of the consumers and lacking of study the behavior of the consumers, it is never easy for the marketers to some extent, to create brand loyalty intentions. There is a wide unexplored area which can be helpful for the companies to achieve consumer’s loyalty. In rural areas which is an huge market but there is not even appropriate infrastructure, this market lacks the advertisement which is must for the mobile service companies to target, educate and update their consumers. If we want to differentiate two brands, it can be differentiated by their advertisement and price (Myers, 1967). People are less aware about the environment which results into environmental mismanagement, the reason behind their lack of awareness is low literacy rate (Dixon & Perry, 1986). Due to the variation in market situation of emerging and established markets it is difficult to manage international brand in developing market and to plan the loyalty agendas and to recognize the suitable market for the companies (Nguyen, Barrett & miller, 2010). In context of Pakistan, as the country has diverse demographic, psychographic and behavioral buying pattern which differentiate the market from the market in other developed and developing countries, due to which Pakistan has different brand loyalty determinants as compare to other markets in developing and developed countries, so it is essential to consider the antecedents of brand loyalty intention of the consumers.

Service quality of mobile service provider has direct relationship with perceived brand value which is provided to the customers rendering to their desires, needs or expectations. There is an undeviating relationship between service quality and the customers brand equity. In Pakistani context mobile service brands usually do not consider the necessity to conduct research or survey, so that can discover or came to know about the rudimentary factors that are appropriate to make Pakistani mobile service users loyal with their networks. Mobile service providers after having intense competition, are in search for the aspects which turns their customers, only loyal to their network and helps them to increase their revenue (Ahmed, N., Majid, M., Nadeem, M. & Jalbani, S.M, 2013).

The association between customer’s equity, value and the relationship with the brand which provides the satisfaction to the customer has direct link with the loyalty intention of the customer with the telecom service provider’s brand. If the user move from one telecom service brand to another customer have to incur switching cost from one network to another, this switching cost from one network to another network also shows the relationship between the customer’s equity drivers and the brand loyalty intention. The effective brand image and the value of the particular brand both can be resulted into the customer’s retention which can have direct impact on the company’s revenue generation. It could affect both customer as they have to bear a switching cost and the service providing company as they will lose their business (Lee, Lee & Feick, 2001).

If this problem is not addressed companies will going to suffer if they remain unable to satisfy their customers according to their needs and expectations. Nowadays users are less loyal with the brand (Bennett & Rundle - Thiele, 2005; Kapferer, 2005; Dekimpe, Steenkamp, Mellens, & Abeele, 1997). Due to the increased competition and the increasing rate of market size which allows new brands to enter into the market and gives their target audience a knowledge related to product and service so that they can avail better substitutes and available options or opportunities (Ballantyne et al., 2006). Due to intense competition it is very difficult for the service providers to differentiate their product from the competitor’s product. (Bennett & Rundle -Thiele, 2005).

The increase in superior alternative choices in the market further aggravate the problem because most of the products have almost similar features, price and quality etc. (Rosenberg & Czepiel 1984) argued that the loyalty of the customer can easily changeable when there is extensive range of lookalike products and retailers available nationwide. The rise in the quality level of products to a standard due to which the quality cannot evidently distinguish the rival brands present within the industry. On the other hand consumer threat for converting network is significantly lesser because the quality service level of substitute network brands is no longer a concern for the service brands in the industry (Bennett & Rundle –Thiele, 2005).

1.3 Objectives of the Study

The objective of this study are as follows:

- To determine the relationship between customer equity drivers i.e. (value equity, relationship equity and brand equity), perceived brand value & brand image on brand loyalty intentions in the telecom industry of Pakistan.
- To determine the effect of control variable age, income and education on the relationship with brand loyalty intentions in the telecom industry of Pakistan.

1.4 Research Question

Stemming from the objective of the study following research questions are identified for this study:

- What is the impact of customer equity drivers i.e. (value equity, relationship equity and brand equity), perceived brand value & brand image on brand loyalty intentions in the telecom industry of Pakistan?
- What is the impact of gender, age, income and education on the relationship with brand loyalty intentions in the telecom industry of Pakistan?

1.5 Significance of the Study

This study will contribute to the existing literature. Firstly the contribution concerns to fill a research gap in theorizing and testing in the context of control variables and CED, brand image and brand perceived value relationship with customer’s brand loyalty intentions. Specifically, this study theoretically elaborate mobile service industry’s variation on the impact of customer equity drivers by studying a framework of mobile service industry as well as also the characteristics of the industry. This study empirically demonstrate the impact of customer equity drivers which are really influenced by the theoretically assumed model of service industry and its characteristics from previous studies. For instance, the consequence of Relationship Equity declines in innovative markets and for hefty advertisers. It will be considered as a noteworthy contribution in the customer relationship management literature, which has very limited work on a systematic examination in service industry and firm levels control variable impact (Kumar et al. 2013; Rust et al. 2004).

The other contribution is from methodological area in which there will be use of multiple data sources which includes data from customers, experts and from secondary sources which will give clue about the customer’s reaction in different circumstances and how these reactions from customers eventually effect the role of customer equity drivers on customers’ brand loyalty intentions in specific circumstances. We also use control variable for investigating the effects on intentions. The customer’s personal characteristics and their link between CEDs to brand loyalty intentions. To the best of knowledge, there is very limited work with these control variables on studies which have simultaneously included all these as control variables (Johns 2006; Molloy et al. 2010).

This study contribution will help managers in mobile service industry to determine what the features which actually have an appropriate impact and what are the loyalty strategies they should employ. This study will give idea how telecom industry should adapt equity drivers, perceived brand value & brand image to their service environment to enhance brand loyalty intentions.

1.6 Limitations and Delimitation of the Study

As the case with other empirical studies, this study also has limitations which offer opportunity to the researchers for further research. This study extends the (Rust et al. 2000) model by following their method of using loyalty intentions instead of behavioral loyalty as outcome variable. The actual perceived loyalty behavior is the eventual evidence of loyalty which is more associated to the metrics of firm performance (e.g., De Haan et al. 2015).

This dataset has limited number of items for CEDs. Even though Composite reliability shows satisfactory reliability in relation with CEDs, however more items per construct can be included like Brand Equity can be measured in context of not only being strong also by being liked and innovative (e.g., Vogel et al. 2008).

The other limitation of dataset is in context of business-to-business. The further recommendation is, it can be generalized the findings by testing whether the exposed moderating role of mobile service industry and characteristics arise in other industries like “business to business” and other countries like, it has been claimed by researchers that business to business customers usually emphasis on partnership cooperation (e.g., Palmatier et al. 2006) by keeping this statement it suggests that the circumstantial possibilities may have minor influence on the relationship between relationship equity and brand loyalty intentions. Lastly this study is restricted to cross-sectional dataset which cannot determine the moderating role of telecom industry overtime. Due to the intense competition and innovativeness it is very important to study the impact with longitudinal study.

1.7 Operational Definition of Key Terms

1.7.1 Customer Equity

Customer Equity which play main role in maintaining long-term successful relationship, it is very complex procedure to understanding the process to grow and manage customer’s equity. The pathway of to grow customer equity is of utmost importance and by successfully growing customer equity gives a significant advantage over competitors (Lemon, Rust, & Zeithaml, 2001).

1.7.2 Customer Equity Drivers (CEDs)

Customer Equity Drivers (CEDs) Customer Equity has three drivers—value equity, brand equity, and relationship equity which is also known as retention equity. These can drivers work independently or together. Every driver has specific, keen actions or levers that can be taken to improve overall customer equity (Lemon, Rust, & Zeithaml, 2001).

1.7.3 Value Equity

Value Equity it is defined as the customer’s valuation with the effectiveness of a brand. It is created on perception of what is sacrificed for what is received. Three key pedals control value equity: quality, price, and convenience (Lemon, Rust, & Zeithaml, 2001).

1.7.4 Brand Equity

Brand Equity is defined as a widespread set of characteristics that effect consumer choice. However, in our exertion to separate the specific drivers of customer equity. Brand equity is customer’s personal and insubstantial valuation of the brand which is above and beyond objectively perceived value (Lemon, Rust, & Zeithaml, 2001).

1.7.5 Relationship Equity

Relationship Equity is defined as the ratio of cost-benefit in a relationship that allows a customers to further carry business relationship with a company or firm (Olsen & Johnson, 2003, Raimondo, Miceli & Costabile, 2008).

1.7.6 Perceived Brand Value

Perceived Brand Value is known as a measure to gain competitive advantage on other brands (Parasuraman, 1997), and also identified as one of the main indicator of loyalty intention of the customer (Parasuraman & Grewal, 2000), in context of service industry loyalty intention of the customer can be forecasted by measuring the level of satisfaction of the customer and quality of the service (Petrick, 1999).

1.7.7 Brand Image

Brand Image used by brand to generate value, by serving the customers to know about the brand, differentiate the brand from others, known the reason to purchase, create positive feelings about brand and in order to provide the reason for extensions (Aaker, 1991). It is very important for the brand to create and maintain the positive image through marketing activities (Roth, 1995) and brand strategy (Keller, 1993; Aaker, 1991).

1.7.8 Brand Loyalty

Brand Loyalty is the degree of understanding of customer to a particular brand, articulated by their repeat purchase regardless of marketing tactics used by the rival brands (Sidek, Yee, & Yahyah, 2008).

Chapter 2

Literature Reviews

2.1 Introduction

The main purpose of this study is to determine the impact of customer equity drivers, perceived brand value and brand image in the mobile service industry of Pakistan.

This chapter presents review of literature related to the brand loyalty intentions of the consumers in context of mobile service industry of Pakistan. Pakistan’s mobile service industry has been discussed in this study and the impact of brand equity, value equity, relationship equity, perceived brand value and brand image on brand loyalty intentions with the control variable like age, education and income. This chapter also contains underpinning theory for this study.

2.2 Theoretical background

In this study the customer’s equity drivers are adopted from (Lemon et al., 2001; Rust et al., 2004) which are brand equity, value equity and relationship equity. These customers’ equity drivers work individually and together. Every customer equity driver has its own specific role like advertising and loyalty programs by the organization boost the overall customer equity of the firm (Rust et al., 2000).

2.2.1 Brand equity

Brand equity is a result that accrue to a product or service with its brand name as compare to those same product or service that did not have the brand name would accrue (Ailawadi, Lehmann, & Neslin 2003), means the advantage that product or service takes due to its well-known brand name. There are several concepts given by scholars for brand equity. Some authors define brand equity as added value, perceived value, brand loyalty, and brand recognition etc. (Aaker & Joachimsthaler, 2000). Brand equity is assessment of mental implications or it could be attitude implications. Three approaches has been described for evaluating brand equity by (Keller & Lehmann, 2003) which are customer mind set (e.g. Aaker 1996, Keller 2008), financial-market (e.g., Mahajan, Rao & Srivastava 1994) and product-market (e.g., Park & Srinivasan 1994) which have some strengths and weaknesses (Ailawadi, Lehmann & Neslin 2003), for evaluating or for the measurement of future value financial market judge theoretical the current and future brand potential (Simon & Sullivan 1993).

Table 1. The key concepts of brand equity

Abbildung in dieser Leseprobe nicht enthalten

2.2.2 Value equity

Value equity is linked with customer’s unbiased judgment of utility that he gets from goods or services which is based on the feeling what he gave up and what he received in return. Value equity shows the customers’ judgment between their expectation related to brand and firms efforts. When customers perceived high value equity they get more satisfied with whatever firm’s offer which automatically leads to increase in loyalty intentions of the customer (Homburg et al. 2006). The customer incline to desire a brand when he recognize a best between self-image, brand image and personality (Rust et al. 2000).

Value equity can always have positive impact on brand performance, if there will be similarity between the firms offering and customer expectations (Rust et al., 2000). The key factor for brand to have a good association with its customer is to create value. If the product or service is not able to meet the needs and expectations of the customers even the best brand strategies and the greatest retention studies will not work for the company (Lemon, Rust & Zeithaml, 2001). If the firm successfully satisfied the customers’ needs and expectations the value equity of the brand will be increase, however if the firm is unable to satisfied the needs and expectations of the customers the value connection between the firm and customers will be wreaked or it could be disrupted if no effort is done to came up with the solution of the problem (Rust et al., 2000).

There are three main drivers of value equity i.e. price, quality and convenience. According to Lemon et al. (2001) quality can be elaborated as the perception of the customer keeping in view the negative and positive aspects of product or service these aspects can be tangible or intangible. Quality of a particular product or service is linked with the specific perception of the customer about the brand. In the Value equity process the quality of the product or service can be disregarded, if the customers are unable to perceive the quality and unable to make the decision for purchasing based on it (Rust et al., 2000). Products service, delivery and the environment are very important factors which should be considered by the firms who are interested to increase their products and service quality (Rust et al., 2000). The price play the major role in the understanding of the value. The price of the product or service has two main impact on the customers mind. The price shows customers how much they have sacrifice for the product or service in the form of money and also shows the criteria of perceived quality that results into the loyalty intentions (Holehonnur et al., 2009). The convenience has great impact in the value generation of the brand in the mind of customers, it reduces the customer’s time, cost and efforts for it is very necessary for the business to look after their location, make the usage of their product easier and the make sure the availability of the product and service (Lemon et al., 2001)

2.2.3 Relationship equity

Relationship equity shows the general perception of customer’s quality interaction with the firm. Due to the reciprocity, perceived value and relationship with firm customers hesitate to take any decision that will go against firms. The loyalty will be higher if the perceived relationship equity is high which will be results in strong association of customer with the firm (Aurier & N’Goala 2010; Selnes & Gønhaug 2000). Having a best feature in the product or service is not enough to keep the customers loyal to the brand. If the brand equity or value equity is up to the mark still it will be not enough to keep the customers loyal with the brand. It is very necessary to have a strong connection between firm and the customers which is possible through relationship equity. Relationship equity is the propensity of the customers to be loyal with the brand without having any objective and subjective judgment of the brand (Lemon, et al., 2001).

Organizations having relationship equity building programs on frequent basis with the customers helps organization to inspire customers to be loyal with the brand which results into the increase in sales and also decreases the chances of the customers to switch to the same product or service offers by the competitors (Rust et al., 2000). The relationship equity can result into the value addition in the product or service for the customers because customers will be satisfied and will have more loyal to the specific brand when they feel that the organization is fulfilling their needs according to their expectations (Vogel et al., 2008).

Building relationship equity facilitates organizations in many ways. Firms can have strong relationship with the customers by delivering them additional benefits it will increased the switching cost of the customers results into the decrease in number of switching and firms can maintain the association with its customers by rewarding the customer’s loyalty intentions with the brand. Emotional link of the customer with the brand plays significant role in building strong relationship equity (Rust et al., 2000).

2.2.4 Perceived brand value

Perceived brand value has a dynamic and multi-dimensional concept. Perceived brand value is estimated or expected preferences and choices of the consumer which is depends on the evaluation of quality or the benefits that consumers get in return, regardless of the cost or efforts paid by the consumers in the shape of price (Monroe & Chapman, 1987). The value presentation from buyer’s point of view is exchange of quality or benefits which is perceived by the buyer in the product or service of the particular brand by making the sacrifice in the form of price for that brand.

Perceived Value = (Perceived Benefits) / (Perceived Sacrifice)

Four different definitions of value related to consumer given by (Zeithaml, 1988) in his research, in which he relates low price with value, in second definition he states value what consumer expect in the product, third definition states that value is quality which costumer expect in exchange of money and the fourth definition states value is whatever consumer get in exchange of what he gave up (Zeithaml, 1988).

There are models on the concept of perceived value. The first ever most known model in 1984 states that, Perceived quality of brand and perceived brand value has positive relationship. There is never a negative affiliation between Perceived value and perceived sacrifice (Dodds & Krishnan, 1984). So, before making any purchase decision consumer mostly have benefit-cost analysis regarding product (Dodds & Monroe, 308, 1985).

The perceived value can be the worth of a product or service of a particular brand which is dogged by the customer’s judgment about its value. The perceived value more dependent to the expectation of consumer in order to satisfy their needs and wants not that much dependent on the product or service market price.

The factor which plays the main role in the success of business for service provider or manufacturer is customer perceived service quality, value and satisfaction that customer gets in return of price (eBuzzell & Gale, 1987; Zeithaml, 1996; Bolton & Drew, 1991; Parasuraman et al., 1988, 1991). There is a direct positive relationship between high level of service performance of brand and high level of perceived brand value (Lim et al, 2006).


Excerpt out of 72 pages


The Effect of Antecedent Variables on Brand Loyalty Intentions in Context of Mobile Service Industry of Pakistan
Effect of Customer Equity Drivers on Brand Loyalty Intentions
Iqra University
Thesis 1 & 2
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ISBN (eBook)
ISBN (Book)
brands, loyalty, marketing, business
Quote paper
Faizan Khan (Author), 2018, The Effect of Antecedent Variables on Brand Loyalty Intentions in Context of Mobile Service Industry of Pakistan, Munich, GRIN Verlag,


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