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Customer satisfaction as mediator between price, trust and brand loyalty: A case study from Malaysia Arslan Umar*

a, Rohaizat Bahrun*

b, Inda Sukati*

c

Faculty of Management, Universiti Teknologi Malaysia, 81310 Skudai, Johor, Malaysia.

uarslan2@live.utm.my*a ; m-rohaizat@utm.my*

b ; indasukati@utm.my*

c

Abstract – Brand loyalty is dream of any company to gain competitive advantage. The interest of

managers of companies lies in good financial performance on which the profitability depends. The

profit means stability and increase in shareholder’s wealth. Brand loyalty has gained greater

attention since last decade as grabbing the attention of new customers considered being more

expensive than to clasp the old ones hence making it a vital factor in whole business world. The purpose of the study is to explore the role of customer satisfaction as mediator between trust and

price and brand loyalty with the support of theoretical framework. The data has been collected

through questionnaires form Skudai district of Johor Bahru in Malaysia. In order to test the proposed research, survey methodology has been used by distributing the questionnaires, the turnout of which

was 179 out of 210. Reliability is checked through Cronbach’s alpha, which came up with a value of

0.90. The hypothesis testing are being done by correlation and multiple regressions. The results highlighted that the trust significantly predicts customer satisfaction and brand loyalty and customer

satisfaction also significantly predicts brand loyalty but unable to mediate the relationship between

trust and brand loyalty, on the other hand price significantly predicts customer satisfaction and brand

loyalty and customer satisfaction also significantly predicts brand loyalty but plays a role of partial

mediator between price and brand loyalty. The results also suggest that companies must pay attention

towards customer satisfaction as well.

Keywords: Trust, Price, Customer satisfaction, Brand loyalty, FMCGs

1.0 INTRODUCTION

Customer is the emperor and companies serve them with the products and services. In today’s business world consensus lies in generation of brand loyalty in order to have long term relationship between customers and company for better profitability specifically in FMCG category where consumers shifts speedily from one brand to another in lieu of similar product category. However, it seems critical to establish and difficult to maintain in absence of contractual relationship as compared to high involvement products and services like automobiles, telecommunication, health, banking and other different sectors. [1-3]. In order to keep customers loyal to the brand, multiple strategies have been adopted by the companies and the key element is customer satisfaction which may leads towards brand loyalty ensuring the financial growth of the company. This paper investigates the impact of trust and price, on customer satisfaction and brand loyalty in FMCG sector. Brand loyalty is not a new

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phenomenon and the previous studies highlighted number of attributes concerning brand loyalty in various sectors of the economy as FMCG sector has been underexplored [3, 4]. The objective of the study is to know utilization of various brands of bread in Malaysia. Furthermore this study explores the strongest brand of bread from the consumers’ perspective. In addition, to analyse the impact of trust and price on brand loyalty independently and role of customer satisfaction as mediator.

2.0 DEFINITION

2.1 Product

Brand and products are two different concepts and may not be used alternatively even they are closely associated. However items that offered for sale in market, satisfies the needs and gain the attention of the people is known as product [5], which includes tangible and intangible attributes [6], while substitutes are those products which are used in replacement of each other [7] or combination of tangible and intangible things. Hence product is considered as the final outcome of any manufacturing process that is offered for sale in the market. In other words products are those things that can be produced due to the result of any manufacturing process in the form of semi-finished or finished goods which can be converted into final product for end user.

2.2 Brand

Brand is defined as the product or service which identifies the feelings of buyer in terms of product uniqueness, relevancy, sustainability and most closer to match his needs [8]. According to Pfoertsch [9] brand is considered superior in lieu of product as it shows the feelings of the person towards the specific product. In this regard brand shows emotions and personal attachment as it has influence on customer behaviour too. Brand has the capability to survive despite the attempts to fail its identity due to strong relationship with users. The concept of branding is growing rapidly and the prior research highlighted that satisfaction and loyalty has special focus on brands [10].

2.3 Loyalty

Oliver [11] defined loyalty as the deeply held commitment for a preferable product or service to re-trade or repurchase over a specific period of time consistently, despite the efforts to persuade the customers to show to substitute product. Loyalty describes the behavior of the producer along with the customer [12]. Moreover, it is considered as the power of the dispositional attachment of a customer towards a brand (product or service provider) with the intentions for consistent repurchase in future [13].

2.4 Price

Price is the consideration in terms of money for the products and services [14]. In this regard, price is the most important consideration [15]. Moreover price significantly influences

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consumer choices as price discount plays an important role to motivate the consumer to switch brands [16] as it is considered as one of the strongest antecedents of loyalty (Ryan et al., 1999). However it is not easy to change the intension of consumers due to brand loyalty. In addition, it is commonly observers that loyal customers inclined towards premium pricing [17] and are less price sensitive [18].

2.5 Brand trust

The term trust has been used widely in field of marketing and has various definitions. According to Morgan & Hunt [19],“trust exists when one party has confidence in other partner’s reliability and integrity”. Similarly Moorman et al., [20] define trust as, “a willingness to rely on an exchange in whom one has confidence”. Hence trust is considered as the key element for building the confidence between customer, product and provider which makes consumers loyal. Moreover, in business world “trust” has been playing pivotal role in developing and maintaining long term relationships [21-23].

2.6 Customer Satisfaction

Customer satisfaction is a broader term that and it is considered as reference point to measure the product’s performance in accordance with customer’s expectations. However it is termed as degree of responsiveness of customer expectation towards the product and there seems to be a positive relation between them [24]. It is the variations of feeling or behaviour of the customer towards the products about customer expectation and product’s performance [25]. In this regard when performance of product matches or increases from the expectation of customer is shows customer satisfaction [26]. Therefore customer satisfaction can be assed from sale of the products. Moreover it is considered as a buyer’s reaction which can be judged via performance of the product; what customers were expecting and what they are getting benefit from their purchase decision [27]. Regardless of this performance of product can be evaluated from the happiness or disappointment of customer regarding fulfilment of customer’s expectations respectively [28]. Singh [29] stated that it is customer’s feelings of happiness or distress when after product usage and expectations. The result of the comparison of the expectations (pre-purchase image) and product’s performance (post purchase behaviour) leads to the satisfaction of buyer [30].

2.7 Brand loyalty

American Marketing Association defines brand loyalty as “the extent to which customer’s purchasing behaviour remains unchanged for a specific product within the same class”. Furthermore, Jacoby & Chestnut [31] termed brand loyalty as “the behavioural response”. The attitudinal approach defines it as the stated preferences, commitments and purchase intentions [32]. Furthermore Amine [33] elaborated two approaches of brand loyalty named as the behavioural approach and the attitudinal approach. In this regard former shows the repeat purchase behaviour of the consumers over a long period of time and later explains the repeat purchase intentions showing their brand loyalty. Moreover brand loyalty has been

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defined by Jacoby & Kyner [34] as the function of psychological process and behavioural response. Hence brand loyalty is considered as the function of behaviour/attitude, so businesses all over the world have unanimously agreed that for the long term profitability for the creation of developing, creation of developing, creating and maintaining brand loyalty as Rosenberg & Czepiel, [35] concluded that it will cost 6% more to acquire new customer than to keeping the old customer, resulting in brand equity [36].

However in business world brand loyalty is considered as the source of competitive advantage in various product categories. Moreover, the ultimate goal of marketers is to uphold brand loyalty. In other words brand loyalty is the unconscious decision of the consumer regarding repurchase of specific brand while keeping in view the price, quality or other features of the brand. In today’s business world brand loyalty is the focal point for practitioners and researchers [37-40]. However, consumer awareness is created via media, technology, saturation of markets with products and global competition. Moreover, in order to achieve long term success, optimal combination price and quality plays a vital role along with long term relationship between customer and the company.

In other words brand loyalty is the behaviour of the customers showing repeated buying pattern along with positive attitude of the same brand despite the presence of substitute availability in the market. Regardless of this, brand loyalty is a situation where consumers show confidence/trust towards a specific brand by repeatedly buying attitude of specific brand even in the presence of competitors. In other words brand loyalty is positively biased behaviour of the consumer towards the specific brand in which consumer intentionally or unintentionally makes purchases, speaks positively about certain brand, has a proud feeing to recommend it, and defends the brand too in case of argument about it.

3.0 LITERATURE REVIEW

3.1 Theoretical foundations

The literature on satisfaction reveals that critical aspects must be examined along with its impact on loyalty. O’ Brien and Jones [41] stated that due to loyal customers, firms experience profitability in both short run and long run. Reichheld and teal [42] further explained that loyal customers spread positive word of mouth as well. Oliver [43] explains that loyal customers affect the profitability directly as by intake of future customers as well. Moreover, potential value of customers towards a specific brand resulting in making the customer as heart of the brad and contributes success in long run. Expectancy disconfirmation theory explained by Oliver [44] states that consumers have a pre-purchase image of the brand for evaluation of performance regarding post-purchase behaviour. However, if performance of the product equates or exceeds the pre-purchase image then customers are satisfied. It leads towards positive disconfirmation with an increase in satisfaction. Hence it is stated that satisfaction has a key role in expectancy disconfirmation theory (EDT).

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3.2 Price, customer satisfaction and brand loyalty

Previous studies show that the relationship between price, customer satisfaction, and brand loyalty. However price is considered as one of the strongest drivers of loyalty [45]. Yee & Sidek [18] explained a positive relationship between price and brand loyalty concluding that brand loyal consumers are less price sensitive. On the other hand consumer purchase intentions are not easily influenced if there is strong brand loyalty; there is willingness to pay more for the brand and reduction in price may have a negative effect on them [17, 47, 48]. According to Bucklin et al., (1998) discounts in price influence consumer switching behavior. However, due to element of loyalty, customers may not be influenced by price reduction. Reichheld & Sasser [47] explained the positive relationship between brand loyalty and price and loyal customers are insensitive to price. Moreover price is the also considered as quality indicator as it is emphasized on brand’s prestige [46, 49]. Sumathi & Saravanavel [50] explained that if the product is being sold at cheap price compare to other products in market it may be considered as of low quality. It can be said that higher price is indicator of high quality and brand loyal customers are fewer price sensitive and reduction in price may have a negative impact on brand loyalty in brand loyal customers.

Satisfaction is a post-usage experience of the customer to assess the performance of product [51]. According to Eggert & Ulaga [52] satisfaction affects loyalty and is predictor of repurchase intensions of the brand. In other words consumers use their past experience, the evaluation of the performance having impact of purchase decisions. Different studies showing practical examples illustrating that loyalty is followed by satisfaction [44, 53]. As satisfaction increases, brand loyalty also increases resulted in repeat purchase [54] and higher level of satisfaction leads to higher brand loyalty [55]. Through literature it can be found that repeat purchase or consumption depicts two phases of attitudinal and behavioural loyalty which is the determinant of the behaviour of the customer that whether consumer will stay with the brand or move to another preferred brand [56, 57]. However it is concluded that satisfaction alone cannot determine loyalty [58] and customers can achieve high satisfaction without inspiring true loyalty. Engles [56] explains that satisfaction is proxy for brand loyalty

Following hypothesis have been formulated: H1a: Price has a positive effect on customer satisfaction. H1b: Price has a positive effect on brand loyalty. H1c: Customer satisfaction mediates the relationship between price and brand loyalty. 3.3 Relationship of trust, customer satisfaction and brand loyalty

Trust is considered as a main factor for relationship strength in every aspect of life. According to Chaudhuri & Holbrook [57] trust drives loyalty. However in terms of consumers’ trust, brings profitability for the company via bonding between brand and the

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customer due to product. Akbar & Parvez [27] showed that loyalty is followed by trust along with along with confidence building. Likewise Islam [1] stated that it is necessary to build an association with the customer. In addition trust not only resulted in worthy services also eliminate the sense of insecurity in the customers’ mind [59] resulting in initiation as well as maintenance of the long term relationship with company and the customer [27] meaning there by to make him loyal. Trust is major reason for development of favourable attitude, positive word of mouth and remains loyal to brand [57].

Trust on brand has a positive relationship with the future purchase intentions [60]. Chirico & Lo Presti [61] explained the trust as the ability of the goods or service providers to find out solution of problems being faced by the customers without discomfort. Moreover, if customer’s problem is not resolved, it shakes the trust and resulted in dis-reputation of the company, making them disloyal. Hart & Johnson [62] argued about the importance of research for ensuring long-term commitment with the product and service provider, trust is one of them. In this regard for a strong relationship between brand loyalty and trust , trust is found to be an important factor [19, 20, 64] as it is considered critical both experimentally and logically. However in order to maintain and develop relationship with customer, trust is considered to be an important element [63, 65]. Previous researches highlighted the strong relationship between brand trust and loyalty as brand trust can be developed via positive attitude [66]. According to Hess [67] brand trust is considered as nucleus for long-term relationship and loyalty. Trust tests reliability as it assures the producer about loyalty of customer despite absence of any contractual relationship. Following hypothesis have been formulated:

H2a: Trust has a positive effect on customer satisfaction. H2b: Trust has a positive effect on brand loyalty. H2c: Customer satisfaction mediates the relationship between trust and brand loyalty.

3.4 Relationship of customer satisfaction and brand loyalty

Loyalty can be judged, explored and investigated via customer satisfaction [69] as it is often considered as strong predictor of loyalty [70]. Researchers have not come to a final conclusion yet as the empirical evidence is not unidimensional. However, some studies shows direct relationship between customer satisfaction and brand loyalty [71], others show the indirect and complex relationship [72, 73]. In addition some studies fail to show a strong linkage [68, 74] however, in general the satisfaction-loyalty relationship is explained by the literature having positive linear effect [75, 76]. Customer satisfaction is considered as one of the important factor and has dominant influence on brand loyalty. However, various researchers concluded with different results in different sectors of economy. Heskett & Schlesinger [77] explained that there is direct relation between satisfaction and loyalty, satisfied customers become loyal and dissatisfied customers move to another company.

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Ibodullayevna [78] concluded that customers will be loyal if they are satisfied with product or service of the company. Moreover, customer satisfaction enhances brand loyalty and lowers price sensitivity as [79] explained. Newman & Werbel [71] found a strong significant relationship between brand loyalty and customer satisfaction. Furthermore Chirico & Lo Presti [61] implies that satisfaction does not really mean loyalty but it has an effect on it. In this regard Moolla [10] stated that customer satisfaction is the weakest attribute in examining brand loyalty among various brand loyalty influences which opposed to the findings of [71] stated a strong relationship between customer satisfaction and brand loyalty. Pirc [12] also revealed a common opinion regarding loyalty shoes that it positively affects customer satisfaction. But how much its affects, empirically, authors have different opinion, sometimes is supported by empirical evidence sometimes not. Kuusik [80] suggests a positive relationship between satisfaction of customer and loyalty as switching behaviour is observed in case of dissatisfaction. Following hypothesis have been formulated:

H3: Customer satisfaction has an effect on brand loyalty.

4.0 CONCEPTUAL FRAMEWORK

The conceptual model of the current study comes from different fields including consumer behaviour, psychology and marketing. It is the combination of the models proposed by different researchers [81-83]. However, more interesting about this model is to check whether the relationship between price, trust and brand loyalty with mediating effect of customer satisfaction can be conceptualized at general level as shown in Figure1. There is a mediating effect of customer satisfaction on brand loyalty of price and trust.

Figure 1

Brand Loyalty

Price

Trust

Customer Satisfaction

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Previously the relationship tested between price, trust, customer satisfaction and brand loyalty is of direct nature in different studies [82-85]. Moreover the potential gap of current study is to explain the mediating role of customer satisfaction among price, trust and brand loyalty as suggested by [25].

In order to measure the variables under study, five point likert scale has been used from strongly disagree to strongly agree. Moreover, reliability of questions measuring variables is measured which are adopted from different studies (see Appendix1). A descriptive study approach has been adopted for determination of the variables, characteristics and relationship with each other. Data was collected through questionnaires form Johor Bahru Malaysia. In order to test the proposed research, survey methodology has been used. A total of 179 completed questionnaires were received out of 210, making response rate 85% as recommended by Roscoe (1975) that sample size larger than 30 and less than 500 are appropriate for most research. Cronbach’s alpha coefficient is used to check the general reliability and internal consistency [86] as the value more than 0.70 is acceptable [87] and Luo et al., [88] stated value 0.7 and higher has a good acceptable value. The reliability for the questionnaire including trust, price, customer satisfaction and brand loyalty is checked and accepted. The selection of the product is made on the basis of high consumption in the budget. The sampling technique used was simple random sampling.

5.0 Results and Discussion

Following results are drawn for the data collected for the current study.

5.1 Description

Almost 67 percent of the respondents were female and the majority was under 25 years of age. The highest education achieved showed variations; nevertheless, the respondents were only 8.4 percent users had a PhD. qualification while around 46 percent are only Masters qualified. The majority of respondents fall in income group less than RM 1000 and 38% belong to second income group (RM.1000-3000). The remaining respondents have income above RM3000. A brief comparative summary of the demographic statistics of the respondents is presented in Table 1 below.

Table 1-Demographic Statistics

Frequency Female Age (18-

25) Bachelors Malay Profession

Income

RM

179 120 67% 107 60% 56 31% 140 78% 125 70% <1000

53%

5.2 Preferred brand of bread

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Table 2 shows the results of consumer survey done in Skudai; and found 5 major brands of bread in Malaysia including Daily’s, Bonanza, Gardenia, Delicia and Massimo brand. Amongst all, around 69% respondents preferred Gardenia making it strongest brand from consumers’ perspective. The consumers of Daily’s bread are 13 percent, Massimo are 8 percent, and few people prefer homemade bread, handmade bread and Arabian bread with response rate of less than 1 percent.

Table 2-Prefered brand of bread

Variables f Percentage

Daily’s 23 12.8 Bonanza 10 5.6 Gardenia 123 68.7 Delicia 3 1.7 Massimo 15 8.4 Other 5 2.8

5.3 Exploratory data analysis

In table 3 below, brand loyalty had the highest level of agreement and also showed highest variation while lowest mean and lowest variation was observed in price. The results showed that majority of respondents are brand loyal with mean value of 3.74 while for brand trust, the mean value (3.46) indicated slightly positive response from respondents. Highest values were observed in brand loyalty and customer satisfaction; however price had lowest agreement with 3.43 mean values.

Table 3-Descriptive Statistics

Variables N Mean Std. Deviation Brand Loyalty 179 3.74 .75 Brand Trust 179 3.56 .65 Price 179 3.43 .56 Customer Satisfaction

179 3.73 .56

5.4 ANOVA

ANOVA was run to check the difference in groups based on demographics. It was observed that brand loyalty, brand trust and price were significant. The highest f-value was observed in brand trust (8.46) while lowest was of price (3.96).

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5.5 Cronbach’s Alpha

There were 179 respondents and questionnaire had 19 question items with a strong reliability The Cronbach alpha 0.90 showed strong reliability.

Reliability Statistics

Cronbach's Alpha N of Items .902 19

5.6 Correlation

Pearson correlation coefficient is used for analyzing strength of relationship of variables with each other in table 4. There is positive relationship between brand loyalty, brand trust, price and customer satisfaction. The relationship of customer satisfaction and brand trust is strongly positive. In addition, there is moderate positive correlation between brand trust and brand loyalty, however there is weak correlation between customer satisfaction and price.

Table 4-Correlations

Variables Brand Loyalty Brand Trust Price

Brand Trust .60**

Price .45** .36**

CS .51** .74** .35** **. Correlation is significant at the 0.01 level (2-tailed).

5.7 Regression

Summary of following table 5 shows the application of multiple regression analysis. The r-square explained 43 percent of the variation in brand loyalty using customer satisfactions, price and brand trust as predictors.

Table 5-Regression

R R Square Adjusted R Square Std. Error

.653 .43 .42 .58

6.0 MEDIATION

A variable is said to be a mediator “to the extent that it accounts for the relation between the predictor and the criterion” [89]. For current study, mediation is tested through Baron & Kenny [89]. According to Barron & Kenny [89], mediation occurs if:

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1. X is a significant predictor of Y

2. X is a significant predictor of M

3. M becomes a significant predictor of Y, controlling for X

6.1 Mediating role of customer satisfaction between brand trust and brand loyalty

After applying Baron & Kenny [89] mediation, following results are obtained. Table 6 shows that brand trust (X) is a significant predictor of brand loyalty (Y). One unit change in brand trust will cause 0.598 units change in brand loyalty. First condition of mediation is met.

Table 6: Coefficients for brand trust and brand loyalty

Model Unstandardized Coefficients Standardized Coefficients

T Sig.

B Std. Error Beta

(Constant) 1.277 .253 5.054 .000 Brand Trust .692 .070 .598 9.919 .000

a. Dependent Variable: Brand Loyalty

Table 7 shows that customer satisfaction (M) is significantly predicting brand loyalty (Y). One unit change in customer satisfaction will cause 0.512 units change in brand loyalty.

Table 7: Coefficients for customer satisfaction and brand loyalty Model Unstandardized

Coefficients Standardized Coefficients

T Sig.

B Std. Error Beta

1 (Constant) 1.189 .325 3.655 .000 Customer Satisfaction

.685 .086 .512 7.937 .000

a. Dependent Variable: Brand Loyalty

Table 8 is showing the relationship between brand trust (X) and customer satisfaction (M). Brand trust is significantly predicting customer satisfaction with 0.736 units change per one unit change. Second condition of mediation is met.

Table 8-Coefficients for brand trust and customer satisfaction

Model Unstandardized Coefficients Standardized Coefficients

T Sig.

B Std. Error Beta

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(Constant) 1.458 .160 9.130 .000 Brand Trust .638 .044 .736 14.458 .000

a. Dependent Variable: Customer Satisfaction

Table 8 is showing the relationship between brand loyalty (Y) and customer satisfaction (M) while brand trust (X) is there. Third condition of mediation is that mediating variable should significantly predict dependent variable while controlling for independent variable. In table 8, customer satisfaction (M) is not significantly predicting brand loyalty (Y) as p-value is greater than 0.05. So, there is a significant relationship between brand trust and brand loyalty but customer satisfaction is not playing any mediating role between brand trust and brand loyalty.

Table 9-Coefficients for customer satisfaction, brand trust and brand loyalty

Model Unstandardized Coefficients

Standardized Coefficients

T Sig.

B Std. Error Beta

(Constant) .969 .304 3.181 .002 Customer Satisfaction

.211 .118 .158 1.788 .076

Brand Trust .558 .102 .481 5.442 .000 a. Dependent Variable: Brand Loyalty

7.2 Mediating role of customer satisfaction between price and brand loyalty

Mediation caused by customer satisfaction between price and brand loyalty is resulted as follows in Table 10 shows that price (X) is a significant predictor of brand loyalty (Y). One unit change in price will cause 0.450 units change in brand loyalty. First condition of mediation is met.

Table 10-Coefficientsa

for price and brand loyalty

Model Unstandardized Coefficients Standardized Coefficients

T Sig.

B Std. Error Beta

(Constant) 1.655 .315 5.247 .000 Price .607 .091 .450 6.700 .000

a. Dependent Variable: Brand Loyalty

Table 10 is showing the relationship between price (X) and customer satisfaction (M). Price is significantly predicting customer satisfaction with 0.348 units change per one unit change in price. Second condition of mediation is fulfilled.

Table 11-Coefficientsa

for price and customer satisfaction

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Model Unstandardized Coefficients Standardized Coefficients

t Sig.

B Std. Error Beta

(Constant) 2.521 .248 10.174 .000 Price .352 .071 .348 4.936 .000

a. Dependent Variable: Customer Satisfaction

Table 12 shows the relationship between brand loyalty (Y) and customer satisfaction (M) while controlling for price (X). Third condition of mediation is that mediating variable should significantly predict dependent variable while controlling for independent variable. In table 11, customer satisfaction (M) is significantly predicting brand loyalty (Y) as p-value is less than 0.05. So customer satisfaction is playing mediating role between brand price and brand loyalty. Mediation is said to be partial if effect of X on Y decreases in the presence of M [90]. Customer satisfaction is partially mediating the relationship between price and brand loyalty as effect of price on brand loyalty is decreased from 0.450 to 0.309 with the inclusion of customer satisfaction.

Table 12-Coefficientsa

price, customer satisfaction and brand loyalty

Model Unstandardized Coefficients

Standardized Coefficients

T Sig.

B Std. Error Beta

(Constant) .291 .360 .808 .420 Price .417 .088 .309 4.753 .000 Customer Satisfaction

.541 .087 .405 6.229 .000

a. Dependent Variable: Brand Loyalty

Simple and multiple regression equations concluded from table 6-12 are as follows:

Trust:

BL = 1.277+0.598BT+ε1

CS = 1.458+0.736BT+ε2

BL = 0.969+0.158CS+0.481BT+ε3

Price:

BL = 1.655+0.450P+ε1

CS = 2.521+0.348P+ε2

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BL = 0.291+0.309P+0.0.405CS+ε3

Customer Satisfaction:

BL = 1.189+0.512CS+ε1

6.3 Statistical diagram of mediation

Brand Loyalty

Price

Trust

Brand Loyalty

Brand Loyalty

Brand Loyalty

b(c)=0.598, p=0.000

b1(a)=0.348, p=0.000

b(c)=0.450, p=0.000

b(c’)=0.480, p=0.000

b(c’)=0.309, p=0.000

Customer Satisfaction

b1(a)=0.736, p=0.000

b2(b)=0.405, p=0.000

b2(b)=0.158, p=0.076

Figure2

For analysis of significance of Mediator

Sab = √ β2Sa2 + α2 Sb

2

SE = √α2σ2β + β2σ2

α

t = (αβ)/SE or (г-ѓ)/SE

Sobel Test = α*β / √ β2 Sa2 + α2 Sb

2

Table 12: Sobel test Statistic:

Model Test Statistic Std. Error Sig.

Price 3.375 0.041 0.000 Brand Trust 1.334 0.087 0.182

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*. Sobel test statistic is significant at the 0.05 level.

Note: “The reported p-values (rounded to 8 decimal places) are drawn from the unit normal distribution under the assumption of a two-tailed z-test of the hypothesis that the mediated effect equals zero in the population. +/- 1.96 are the critical values of the test ratio which contain the central 95% of the unit normal distribution”.

7.0 RESULTS AND ANALYSIS:

Conclusions drawn from the above Figure-2 that the customer satisfaction is unable to play role of complete mediator between price and brand loyalty, as the value of c’ is 0.309 as compared to c which is 0.450 reduced by the inclusion of mediator (customer satisfaction) by 0.141 but the p-value still remains significant p=0.000 on both paths reducing the role of customer satisfaction as partial mediator. On the other hand trust independently explaining brand loyalty. With the induction of customer satisfaction as mediator between trust and brand loyalty value of c’ 0.480 is reduced to c which is 0.598 but the path between customer satisfaction and brand loyalty become insignificant as opposed to conceptual model. Though customer satisfaction and brand loyalty is correlated but the path remains insignificant at alpha 0.05 which is unable to fulfill the assumptions of mediation by [89] that mediator must predict dependent variable significantly. The test results from Table 12 explains that the value for trust fall in critical region +/-1.96 but the p value is not significant, resulting in rejection of H1c and value for price does not fall in critical region but p value remains significant so we may accept H1b, but to get the critical region value sample size may be increased to get desired results. By summarizing it can be concluded that price influencing customer satisfaction and brand loyalty positively and significantly. In addition trust has also a positive significant effect on both customer satisfaction and brand loyalty, accepting the hypothesis H1a, H1b, H2a, H2b, furthermore customer satisfaction influences brand loyalty positively and significantly in independent relation. However customer satisfaction plays a role of partial mediator between price and brand loyalty accepting H1c, moreover customer satisfaction is unable to play role of mediator between trust and brand loyalty resulting in rejection of H2c.

The present study contributes to the knowledge for better understanding of interrelationship of price, trust, customer satisfaction and brand loyalty. The findings suggests that there is significant relationship among these variables but there is lack of role of mediator of customer satisfaction between trust and brand loyalty, as opposed to the findings by Kuusik [80] that there is direct connection between satisfaction and loyalty and dissatisfied customers move to another vendor in service industry but for FMCGs it is not the case as customers trust the vendor and they stay with brand even they are not satisfied with the brand. In addition, trust has a strong positive influence on brand loyalty which is consistent with results of Akbar and Pervaiz [27]. Managers must concentrate on satisfaction of the customers which fails to establish a strong relation with brand loyalty. The results are in consistent with Moolla [10] showing that among different attributes affecting brand loyalty, customer satisfaction is the weakest among them.

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8.0 CONCLUSION

In concluding it can be said that people in Malaysia for the specific FMCG category trusts the brand whether they are satisfied or not and will continue purchasing the brand of their choice. In addition there may be difference of culture, habits, buying pattern or any other element which may include guarantee provided by the brand in such a way that customers rely on brand rather than addressing the element of satisfaction by bypassing it. The agents of the brand are reliable or marketing strategy has been done in such a way that customers trust the brand rather than to address their sense of satisfaction. Satisfaction being post purchase behavior of the consumer related to the product, consumers before buying the product creates an image in their mind through different means including advertisements, internet reviews, surveys of the market and discuss with friends or people in their community creating a pre purchase image in their minds which resulted in their satisfaction or dissatisfaction feeling regarding the product after its use by comparing the pre purchase image and post purchase performance. It can also be concluded that they have no pre-purchase image in their minds, may result in loyalty if they are satisfied with the product. Furthermore theory of expectancy disconfirmation states that if consumers are satisfied with the products there will be tendency of repurchase and if they are not satisfied then they will not purchase. This theory cannot be applied freely in different sectors where any kind of switching barriers are present including telecommunication and banking industry. This theory tested in absence of switching barrier/cost faced by consumers and results showed that consumers will continue to buy even though they are not satisfied with the product due to their trust on brand. The results also showed that expectancy disconfirmation theory is not valid for this current study in Malaysia and cannot be upheld for the product category under study.

9.0 LIMITATIONS AND FUTURE RESEARCH:

There are certain limitations to the study as the most of the research face. Firstly data is limited to certain number of respondents; it is therefore difficult to generalize the results for large number of respondents. Secondly, research is limited to one district only. Future study may be done in other places in Malaysia and other countries which may be helpful for managers to satisfy customers in better manner. In addition, the number of respondents from different occupations including labour class and higher income groups can be targeted. The number of respondents may also be increased which may give altogether different results. The relationship may be explored in-depth by including moderating variables into the conceptual framework. Furthermore other antecedents of brand loyalty may also be taken inconsideration for future research. There is need of further exploration on the behaviour of the representatives of the brand with customers that how they interact with their customer to make them brand loyal.

10.0 PRACTICAL IMPLICATIONS:

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This study will help managers in several ways. It will help managers to focus on the relevant variables under study. In addition it will help to increase brand loyalty which in result reduce marketing cost. Furthermore this will also help marketers and managers for exploring new dimensions of variables under study. It can also be used for effective marketing and increase in sales.

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Appendix 1

Item-Total Statistics

Dimension Code Item Source Cronbach's

alpha

Customer

Satisfaction

CUS01 I am very satisfied with FMCG brand I purchase

[91] .894

CUS02 Distinctive product attributes in FMCG keep me satisfied

[92] .894

CUS03 My loyalty towards a particular FMCG brand increases when I am satisfied about that brand

[93] .896

22

CUS04 I do not repeat a purchase if I am dissatisfied about a particular FMCG brand

[94] .898

CUS05 I attain pleasure from the FMCG brands I am loyal towards

[95] .894

CUS 06 I believe that the product meets my expectations

[82] .897

Brand Trust

BT01 I trust the FMCG brands I am loyal towards

[96] .893

BT02 I have confidence in the FMCG that I am loyal

[19] .892

BT03 The FMCG brands I purchase has consistently high quality

[97] .893

BT04 The reputation of a FMCG brand is a key factor in me maintaining brand loyalty

[98] .896

BT05 My brand never disappoints me [82] .897

Price

P01 This brand offers value for money [82] .899

P02 I Believe that this brand is reasonably priced

[82] .899

P03 I will continue to buy my brand if prices are increased somewhat

[99] .900

P04 I will decrease my purchase if prices are decreased somewhat

Self-generated item .913

Brand

Loyalty

BL01 I always buy my chosen brand Self-generated item .895

BL02 I consider myself loyal to my brand [100] .894

BL03 I recommend my brand to someone who seeks my advice

[100] .895

BL04 I say positive things about my brand [100] .894