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Page 1: A study of the impact on brand loyalty of customer ... study of the impact on brand loyalty of customer experiences within the context of online communities 2 Abstract An online community

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A study of the impact on brand loyalty of customer experiences within the context of online

communities

Page 2: A study of the impact on brand loyalty of customer ... study of the impact on brand loyalty of customer experiences within the context of online communities 2 Abstract An online community

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Abstract

An online community is a valued business medium for companies in terms of disseminating

information and retaining customers. It is considered as a key strategy for online marketing

that can help to build brand loyalty effectively. Online customer experience is a fundamental

concept in understanding customers’ perceptions, attitudes and behaviour in online

communities. Online customer experience is an essential factor for e-marketers. Additionally

as a consequence of creating unique customer experiences, which is helping to attract repeat

purchases and differentiate a firm from its competitors (Pine and Gilmore, 1998). This study

discusses the underlying impacts of customers' interaction experience dimensions on brand

loyalty within the context of online communities. Particularly, this study examines the

influence of customers’ interaction experience dimensions on trust, satisfaction and brand

loyalty and whether this influence is mediated by customer satisfaction and trust. Few studies

have examined how customers' interaction experiences affect brand loyalty. Furthermore,

satisfaction and trust are expected to be antecedents to brand loyalty. Little studies have

pointed out the link between trust and satisfaction and how this link can facilitate to drive

brand loyalty efficiently within the context of online communities. This study proposes a

framework for testing the relationships between customers’ interaction experience

dimensions, satisfaction, trust and brand loyalty.

Keywords: customer experiences, online communities, pragmatic experience, hedonic

experience, usability experience and sociability experience.

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1. Introduction

As a core objective of marketing activities, maintaining and enhancing brand loyalty have

been widely acknowledged (Aaker, 1991; Baldinger and Rubinson, 1996). Brand loyalty

value is self-evident for a company (Reichheld, 1996). With the growing importance of

online communities, such as Apple Inc (Macintosh, iPod, iPhone), researchers and marketers

have emphasized that an online community has an effective impact on participants’

experience. Participants’ experience helps to understand the strategic value of an online

community. An online community is a key for a company’s online marketing strategy that

can help to build brand loyalty effectively. Moreover, an online community enables

customers to interact with a company and among themselves.

Marketing activities have focused on success in the product marketplace by examining the

physical aspects of products and services such as quantity, quality, functionality, availability,

accessibility, delivery, price and customer support. Recently, marketing managers underline

the importance of creating value for their customers (Fudenberg, 2000; McAlexander et al.,

2002). The current orientation in marketing is to create positive and unique experiences for

the customers (Pine and Gilmore, 1998; Gilmore and Pine, 2002). A study by Shaw and Ivens

(2002) shows that about 85 per cent of business leaders approve those traditional elements

like price, delivery are no longer an effective business strategy .The new differentiator today

is customer experience.

Recently, the concept of customer experience has used as a key strategy for online marketing

that, can help to gain competitive advantages. Wherefore, this study seeks to examine the

impact of customer experience demotions on brand loyalty and whether that impact is

moderated by customers’ satisfaction and customers’ trust within the context of online

communities.

2. Research Background

2.1. Customer experience

The “Customer experience” concept has been studied across a range of business situations,

including online business, service delivery, tourism and retailing (Arnold et al. 2005; Bonnin

2006; Jones 1999; Quan and Wang 2004; Tsai 2005). Customer experience is defined as “the

internal and subjective response that customers have to any direct or indirect contact with a

company” (Meyer and Schwager, 2007, p. 118). Over the past few years, both marketers and

academics have showed an interest in the measurement and assessment of customer

experiences. Customer experience is considered as a psychological concept, which is a

comprehensive, subjective response developed from customer contact with companies. This

contact could include different levels of customer participation (Gentile et al 2007; Lemke et

al, 2011). Customer experience is used to enhance the competitive advantage that is difficult

to be imitated (Pine & Gilmore, 1998). As a consequence, an outstanding customer

experiences is critical to marketers in today’s global marketplace and can result in brand

awareness, gain customer loyalty and eventually increase profits (Gruen et al.,Michael, et al,

2006).

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2.2Comparison between online and offline customer experience

There are several differences between the both online and offline customer experience. The

main difference is the degree of personal contact and the lack of face-to-face contact in online

context. The online context enables very rich information, whereas face-to-face might be

more limited. On the one hand, another main difference between the two contexts is the time

period. Customers can purchase, communicate and exchange information online at any time

and any place suite them, specifically with easy Internet access via mobile devices, whereas,

within the offline context it restricted by the opening hours of the company (Rose et al;

2011).

2.3Customer experience in online environment

The Internet has become one of the most significant and most commonly used

communication media. Customer experience in online environments is defined as the

“cognitive state experienced during navigation” (Novak, Hoffman, and Yung 2000, p. 22).

Tynan and McKechnie, (2009) consider that customer experiences in online environments as

a key issue to be managed. Blumler, (1979) Forgas (2000) assumes two main components to

measure human experience those are a cognitive component and an affective component.

Since the mid-1990s, a number of researchers have applied this two-dimensional experience

framework to investigate customer experiences in online environments, for instance in the

context of online shopping experience (Babin et al., 1994; Mathwick et al, 2001; Overby and

Lee, 2006; Bridges and Florsheim, 2008), Web browsing behaviour (Hoffman and Novak,

1996) and online retail behaviour (Jones et al., 2006; Noble et al., 2005). In general, these

studies focus on experience conceptualized as a monolithic construct such as consumer's

Internet experience or as a two-dimensional construct focusing on utilitarian/hedonic

dimensions only.

2.4Customer experience in online communities

The widespread of the Internet and the human demand to connectedness, knowledge,

entertainment and information have integrated new social forms such as online communities.

Rheingold (1993, p.30) defines the online community as “a social aggregation that emerges

from the Net with sufficient human feeling to form a web of personal relationships in

cyberspace”. Armstrong and Hegel (1996) mention that an online community is a

fundamental method of a company’s online marketing strategy that can help to build brand

loyalty effectively. There is a consequence of creating unique customer experiences in online

communities, which is helping to attract repeat purchases and differentiate a firm from its

competitors (Pine and Gilmore, 1998 Gummerus et al (2012) reference that customers, in

addition to be more satisfied and loyal, likewise experience relationship benefits from

engaging with the brand community. Nambisan and Nambisan (2008) examine customer

perception’s experiences dimensions within online communities, which include emotional

(flow), utilitarian and social interaction. More recently, Nambisan and Watt (2011) apply a

four-dimensional construct (online community experience) to capture customer experiences

in such online product communities and examine its influence on customer attitudes

regarding the product, the company and the quality of service.

2.5 Online brand loyally, trust and satisfaction

Brand loyalty has been considerably studied in business researches. Brand loyalty describe

the characteristic of consumers, who have a strong commitment to a brand; because they

view a brand as being more satisfactory than the alternatives ones and this evaluation is

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reinforced through repeated use. Aaker (1999, P.25) defines brand loyalty as "the degree of a

consumer’s emotional attachment to a brand and suggests that it has six dimensions:

consumer willingness to repurchase, price premium, satisfaction rate, switching cost,

preference over brand, and commitment to brand". In an online community context Hee

young, et al (2008) argue that loyalty to brand can be influenced by many factors such as

customer’s participation and Web site management. Consumer participate in an online brand

communities, because the trustworthy information and experiences customers are likely to be

committed to the community, which leads to enhance brand loyalty (Hee young et al., 2008).

Trust: Trust is a cornerstone in terms of building a long-term business relationship and

partnership. Trust refers to the depth and assertion of feelings based on conclusive evidence

McKnight and Chervany, 2002). Uncertainty and risk are the necessary conditions that reveal

the value of trust (Moorman et al., 1993). Trust is defined as “expectation of the parties in a

transaction and a risk associated with assuming and acting on such expectation” (Deutsch,

1958). Chiou (2004) &Reichheld (2001) suggest that trust is an important antecedent of

loyalty, because it might help to attract new online customers and to retain existing ones

(Gefen et al., 2003a). Consumers’ perceived trust could affect customer satisfaction (Chiou,

2004), because trust is an important factor in consumer outcome evaluation. The trust

research literature assumes that there are differing views on the role of trust and its position

as an antecedent or consequence of experience. According to Yoon (2002) Trust weakens or

strengthens by experience. However, researchers identify that trust is an antecedent of

satisfaction (Grewal et al., 1999). Moreover, Ha and Perks (2005) indicate that trust is

influenced by consumers’ prior experiences and satisfaction Chiou (2004) point out that trust

affects loyalty and satisfaction directly and indirectly through perceived value. Ha and Park

(2006) find evidence to support a model of online purchase experience, which demonstrated,

trust to be an outcome of a number of attributes of the purchase environment.

Satisfaction: Satisfaction is overall level of customer pleasure and contentment resulting

from experience with the service (Hellier et al., 2003). Oliver (1997) defines satisfaction as

“the consumer’s fulfillment response. “It is a judgment that a product or service “provided a

pleasurable level of consumption-related fulfillment, including levels of under- or over-

fulfillment” (Oliver, 1997, p. 13). Customer should depend on their direct experience with the

technology to form perceptions of technology performance. Hence, user experience with IT

serves an antecedent of satisfaction, dissatisfaction response (Liqiong el al, 2010). In 1994,

Ganesan demonstrates that satisfaction is a positive affective reaction to an outcome of a

previous experience and is a central factor to succeed the business. Several researchers have

examined the relationship between satisfaction and brand loyalty. Accordingly, Bitner (1990)

indicates customer’s satisfaction has an indirect influence on brand loyalty, mediated by

perceived quality.

Additionally, brand loyalty is directly influenced by customer satisfaction. Satisfaction and

loyalty are not replacement for each other (Bloemer & Kasper, 1995; Oliver, 1999). It is

possible for a customer to be loyal without being highly satisfied. Research by Kennedy et al

(2001) shows that customer satisfaction is an antecedent of trust. Consequently, Szymanski

and Hise (2000) claim reflect the findings of Szymanski and Hise (2000) that position online

financial security as the second most important factor driving online satisfaction. Though,

with some notable exceptions, to date, empirical research that focuses on exploring the trust-

satisfaction link have largely been limited to studies (Furnell & Karweni, 1999;

Ratnasingham, 1998).

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3. Research Gap

The importance of online communities in online business and commutation is increasing.

Additionally, the online business is contributing a large amount of economic action in the

marketing domain (Muniz & O’Guinn, 2001). Customers' interactions in such online

communities could help companies to improve products or services (Füller; el al, 2007).

Nambisan and Watt (2011) study how can manage customer experiences in online product

communities, propose a four dimensional construct of an online community experience to

help capture customer experiences in online communities and examine its impact on

customer attitudes regarding the product, the company and the quality of service. They argue

that there might be other possible impacts of customers’ interaction experience in online

communities on many others factors such as brand loyalty. There is a need to pay more

attention to study these potential impacts. A growing body of research in brand communities’

area (Lycos Quote.com case study) admit that building an online community has a positive

impact on improved brand loyalty. (Participate.com, 2001b) Moreover, this increased in

brand loyalty has measurable results for each consequence predicted in: affective, cognitive,

and behavioural.

Although there is a dynamic growth in managing and studying customer interaction

experiences within an online community, (Dholakia et al; 2004; Gruen et al; 2006;Nambisan

& Watt, 2011), it is critical for researchers and marketers to understand what are the customer

experiences dimensions of interaction in such online community and how customers'

perceptions about their interaction experience in the online community could impact their

loyalty. There have been many studies of the factors influencing loyalty, such as service

quality, product quality, information quality, corporate image, price and commitment

(Devaraj, et al 2001; Lee & Kim, 2005; Nguyen & Leblanc, 2001),nevertheless little work

combining brand loyalty with the online community concept. Therefore, the purpose of this

study is to address the gap in the literature concerning this area of research by developing and

empirically testing a model for experience dimensions of customer’s interaction experience in

an online community. Moreover, this study aims to point out the impact that customer’s

experience dimensions have on brand loyalty. In other words, the statement of the study

problem is what the dimensions of customer experiences are and what the impact of these

dimensions on brand loyalty? In addition, past research studies identify several dimensions

and sub-dimensions of customer experiences. However, further studies may provide benefits

in considering other dimensions like virtual experience (Guttentag, 2010). Therefore, this

study will examine the experience dimensions such as pragmatic experience, hedonic

experience, sociability experience, usability experience (Nambisan & Watt, 2011) and virtual

experience (Guttentag, 2010) and its impact on brand loyalty mediated by satisfaction (Hye,

2004) and trust (Yoon 2002), with a particular attention paid to brand loyalty as a final

dependent outcome of a great online customer experience.

Hye (2004) argue that experience has an impact on satisfaction yet there is only limited

research that looks specifically at this impact. Satisfaction is a positive affective reaction to

an outcome of a previous experience and is an essential factor enhancing business. (Ganesan,

1994). It considered as an important antecedent of brand loyally. According to Yoon (2002)

trust weakens or strengthens by experience. However, researchers identify that trust is an

antecedent of satisfaction (Grewal et al., 1999). Moreover, Ha and Perks (2005) assume that

trust is influenced by consumers’ prior experiences and satisfaction. Chiou (2004) point out

that trust affects loyalty and satisfaction directly and indirectly through perceived value.

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Furthermore, Trust is proposed as another important antecedent of loyalty (Reichheld et al.,

2000). Szymanski and Hise (2000) claim that there is a need to more research into the range

of drivers of online satisfaction and in particular the trust-satisfaction link. In fact, like

comments appear pertinent regarding both business-to-business (Bauer et al., 2002) and

consumer (Sirdeshmukh et al., 2002).

For the reason, that customer interaction experiences in an online community is not mature

enough and identify several areas for further research. Nambisan and Watt (2011) indicate

that might be other possible impacts of customers’ interaction experience in online

communities should be considered for extend knowledge in an online community domain.

For the previous theoretical debate, the present study meets the strong recommendations by

considering the customer experience dominations impacts. Focuses on exploring the

customer interactions’ experiences and trust-satisfaction link have largely been limited to

studies (Furnell & Karweni, 1999; Ratnasingham, 1998) this study will apply trust and

satisfaction to be consequence variables that both independently and together have a direct

influence upon brand loyalty.

In summary, this study makes three major contributions:

1. It advances the extant online customers' interaction experiences literature by exploring the

role of key mediators between online community experience and brand loyalty

2. It provides further insights into the relationship between online customers' interaction

experiences and brand loyalty in an online community setting.

3. It establishes the role of trust and satisfaction in reinforcing the effect of on brand loyalty.

4. Research Aim

This study aims to investigate the dimensionality of customers' interaction experiences in the

online community and its impact on consumer satisfaction and trust. To test whether the

customers’ experience dimensions in such communities significantly impact brand loyalty

and whether this impact mediated by customer satisfaction and trust. Understand how

consumer satisfaction and trust contribute to build brand loyalty.

The aims of the study will achieve through the pursuit of the following objectives:

1. To identify the dimensions of online customer interactions’ experience and its impact

on brand loyalty.

2. To develop a conceptual framework that illustrates the relationships between online

customer interaction experience, consumer satisfaction and trust.

3. To investigate the impact of online customer interactions’ experience in an online

community on brand loyalty and whether, this impact mediated by customer satisfaction and

trust.

4. Describe implications that emerge from the current research for future studying in an

online community field.

5. To contribute to both literature on online communities and customer experience.

5. Research Questions

The research questions present below showing how the study objectives will integrate into

the current research.

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1. What are the different experience dimensions associated with online communities that

have an impact on consumer satisfaction and trust?

2. What are the online customer interaction experience dimensions that contribute to a

positive influence on consumer satisfaction and trust?

3. What impact does the consumer satisfaction, trust have on the brand loyalty?

4. What directly impact does online customer interactions’ experience have on brand loyalty?

6. Research methodology

The Quantitative approach has a linear and logical structure. Hypotheses take the structure of

expectations about possible causal relation between the concepts identified in the hypotheses.

Therefore, the determination of the causal relations defined by the hypotheses supported or

rejected. The hypotheses will design to test the relations among the constructs. To investigate

the research hypotheses, a quantitative research method will employ in from a questionnaire

survey. The data will collect through an electronic questionnaire that will be designing and

setting available to customer who interacted and participated in an online community.

Moreover, this method will allow a rich context to conduct this research. Further, this will

clarify the impact of customers' perceptions about their interaction experience in the online

community on brand loyalty mediated by satisfaction and trust.

7. Research Framework and Hypothesis

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Based on the review of online customer experiences literature, the study will be proposed

initial conceptual framework and a set of hypotheses to test this framework as follows:

H1.Pragmatic

Experience H1a. Influences brand loyalty Positively.

H1b. Influences satisfaction Positively.

H1c. Influences trust Positively.

H2. Hedonic

Experience

H2a. Influences brand loyalty Positively.

H2b.Influences satisfaction Positively.

H2c. Influences trust Positively.

H3. Sociability

Experience

H3a Influences brand loyalty Positively.

H3b. Influences satisfaction Positively.

H3c. Influences trust Positively.

H4.Usability

Experience H4a. Influences brand loyalty Positively.

H4b. Influences satisfaction Positively.

H4c.Influences brand loyalty. Positively.

H5.Virtual

Experience H5a. Influences brand loyalty Positively.

H5b. Influences satisfaction Positively.

H5c.Influences trust Positively

H6.

Experience dimensions influence brand loyalty directly.

H7.

Trust influences brand loyalty positively.

H8. Satisfaction influences brand loyalty positively.

8. Conclusion

In summary, this paper set the foundations for the study by introducing the background and the

study gap together with the study aims, study questions, objectives and includes initial

framework and hypotheses. An explanation of the study methodology will be used is also

presented. The probable contributions of the study are highlighted. The current study tests the

conceptual model and hypotheses developed based on the existing literature. To accomplish the

study objectives, hypotheses are needed for the investigation of the effect of customer

Code Hypothesis

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experience dimensions on brand loyalty. That must subsequently be tested through: (1) an

empirical study is used ‘quantitative approach’. An electronic questionnaire will be designed

and set available to customer who interacted and participated in an online community. SPSS

will be applied for statistical and analysis the data.

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