BRAND LOYALTY AND DETERMINATES OF PERCEIVED QUALITY AND WILLINGNESS TO ORDER.

Author:Falahat, Mohammad
Position::Report
 
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INTRODUCTION

Due to intense competition within the global market place, companies have shifted their marketing strategies towards branding (Krystallis and Chrysochou, 2014). Marketing strategies for brands have been diverted towards relationships and value creation that is directly linked to brand loyalty (Maheshwari et al., 2014). For decades, brand loyalty has been gaining recognition as an important component of marketing literature (Howard and Sheth, 1969). By focusing on brands as an effective marketing tool in business strategies, manufacturers have successfully persuaded end consumers to purchase their products. Distributors, on the other hand, conduct business-to-business (B2B) commercial transactions focusing on distribution control and building and developing relationships with customers (Steenkamp and Kumar, 2007). By utilizing appropriate merchandising strategies, present-day retailers hold significant positions in the marketplace through managing customer relationships and loyalty. Therefore, it is crucial for manufacturers to understand and fulfil retailers' needs in building brand loyalty. Brand loyalty is essential in the hardware tools industry for retailers and manufacturers alike as product turnover rates are high. With technical developments and strong consumer preferences for the latest products, many hardware items are quickly outdated and replaced with newer versions. Hardware tool manufacturers need to constantly innovate their products to remain at the forefront of this increasingly competitive industry. When consumers perceive a brand to be of high quality, they are more willing to purchase the latest version of a particular product if the company has high brand equity (Kim and Hyun, 2011), which leads to retailer loyalty. Brand loyalty has played an important role in creating long-term advantages for companies because loyal customers do not need any promotional efforts to make them purchase products. Indeed, they are willing to pay a premium to secure the benefits and quality sought from their favourite brand (Gilaninia and Mousavian, 2010). In particular, the aim of this study is to develop an understanding of the driving forces behind customers' willingness to order and the contributing factors that affect perceived quality toward brand loyalty among Malaysian hardware retailers.

BACKGROUND OF STUDY

Many theoretical models have been proposed to explain how purchasers evaluate and behave toward brands (Aaker, 1991; Kapferer, 2008; Keller, 1993). There are various types of purchase behaviours (Falahat et al., 2017; Sheth, 1981). In our extended model, we expand on this to consider significant factors that influence the quality perceived by hardware retailers and their willingness to order. Further, we analyse product prices, advertising, distributor image and brand associations in relation to brand loyalty and willingness to order. The next section presents a critical review of relevant literature on these issues and their interrelationships.

Price

Prices reflect the value that consumers exchange for the benefits of having or using products and services and they also embody what needs to be given up or sacrificed to obtain a product. Price is consistently stated as a major determinant of purchasing decisions (Yoo et al., 2000; Chattopadhyay et al., 2010; Gedenk and Neslin, 1999). Indeed, this is lower-bounded by the axiom that people cannot buy what they cannot afford. Various studies have also revealed a significant positive relationship between price and perceived quality (Chattopadhyay et al., 2010; Keller, 2013; Yoo et al., 2000).

Advertising

Poddar et al. (2013) discuss the adoption of trade promotion by retailers. Kotler et al. (2013) defines promotion as activities that communicate the merits of a product and persuade target customers to buy it. Trade promotion has an impact on retailers' behaviours (Neslin et al., 1995). Gedenk and Neslin (1999) found that retail price promotions have strong, positive and immediate effects on the purchase of branded products. Brand loyalty is reflected in repeated purchasing behaviours that are derived from retail promotion and determine future brand loyalty. Tragi also indicated that manufacturers encourage retailers via trade promotion, leading to increased demand from those retailers and increased sales to end consumers. Advertising is one of the most common channels by which firms convey product information to consumers. Moorthy and Zhao (2000) suggested a positive relationship between the amount spent on advertising and perceived quality. Signalling theory (Nelson, 1974) and information processing theories posit that brand familiarity and the learning of advertisement-based information increase with advertisement frequency. On the supply side, a firm advertises to promote its product, while from the perspective of demand; consumers are sensitive to product price, product quality and advertising expenditure. Nevertheless, advertising exhibits a positive relationship with quality if demand effects outweigh supply effects (Chenavaz and Jasimuddin, 2017). Chenavaz and Jasimuddin (2017) further argue that a firm may disproportionately emphasize advertising products of lower quality to maximize profit despite consumer awareness of their inferior quality. Advertising can improve consumers' subjective quality perceptions and enhance their Willingness To Pay (WTP) (Kirmani and Rao, 2000; Zeithaml, 1988) and this can occur regardless of products' objective quality or lack thereof (Tsui, 2012).

Distributor Image

Distributors face pressures to maintain impressive positions (Stern and Weitz, 1997) although, according to Mulky (2013), the role of distributors is no longer prominent because of dynamic market environments. Kraftt maintains that distributors, wholesalers and retailers are vital intermediaries of marketing channels that perform better than most manufacturers. Positive distributor image is important for retaining customers' loyalty (Kim and Lee, 2010).

Brand...

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