Transcript The Moderating Effect of Brand- inertia on the Relationship Hsiu-Yuan Tsao

The Moderating Effect of Brandinertia on the Relationship
Between Switching Cost and Loyalty
Hsiu-Yuan Tsao
Takming University of Science and Technology
Taiwan
ABSTRACT
• concept of brand-inertia serves for examining
previous research into the impact of satisfaction
and switching on loyalty
• A web questionnaire is used with Yahoo web mail
users.
• Therefore, this study suggests that the strategy
of raising the switching cost to prevent brand
switching behavior is effective only with low
brand-inertia consumers.
The Impact of Satisfaction and
Switching Cost on Loyalty (Cont.)
• Most researchers express little doubt
about the positive role of satisfaction on
the formation of loyalty.
• However, some do doubt whether high
switching cost universally makes for
consumer loyalty and diminishes the
relationship between core-service
satisfaction and repurchase intentions.
Brand Inertia
• Odin (2001) describes consumers who
attach great importance to brands of
choice (high brand sensitivity) as brand
loyal, and considers any repeat purchasing
behavior under conditions of weak brand
sensitivity as brand-inertia.
•Repeat
Purchase
Behavior
Strong
Brand
Sensitivity
Loyalty
Low Brand
Sensitivity
Inertia
Conceptual Model and Hypotheses
• H1: The higher the
satisfaction, the higher
the loyalty.
Brand Inertia
H4
Satisfaction
H1
Loyalty
• H2: The higher the
switching cost, the higher
the loyalty.
H3
H2
Switching Cost
• H3: The lower the brandinertia, the stronger the
impact of switching cost on
loyalty
• H4: The lower the brandinertia, the stronger the
impact of the satisfaction
on loyalty
Research Methodology
• Between September and November
2006, we directed a randomly
selected 1000 Yahoo mail users to a
web questionnaire of our design,
• issuing three reminders and offering
five USB flash drives as prizes.
• The percentage of completed, usable
responses was around 18%.
Measures
• The measures were validated items
used by previous researchers:
– satisfaction with online services and
cost for switching between web sites
were evaluated by questions adapted
from Anderson and Srinivasn (2003)
– the concept of brand-inertia was
evaluated by three questions adapted
from Odin (2001)
Results
Table 1. The Result of Regression Analysis on LOYALTY
R2
Group
B
0.26
High Brand Inertia
P-Value
0.01*
Satisfaction
0.43
0.02*
Switching Cost
0.16
0.35
0.46
Low Brand Inertia
0.00**
Satisfaction
0.49
0.00**
Switching Cost
0.35
0.00**
**:<0.005 * :<0.05
B:Standard coefficient
Results (Cont.)
• H1: The higher the satisfaction, the higher the loyalty.
(SUPPORT)
• H2: The higher the switching cost, the higher the loyalty.
(SUPPORT)
• H3: The lower the brand-inertia, the stronger the impact of
switching cost on loyalty (SUPPORT)
• H4: The lower the brand-inertia, the stronger the impact of
the satisfaction on loyalty (REJECTED)
The Moderating Effect of Brand
Inertia on the Relationship of the
Switching Cost and Loyalty
The impact on Loyalty
• That is, for those attaching
great importance to brands
of choice, the relationship
of high switching cost to
loyalty is stronger.
High
Satisfaction
Switching Cost
Low
Low
High
Brand Inertia
• Therefore, this study
suggests that the strategy
of raising the switching cost
to prevent brand switching
behavior is effective only
with low brand-inertia
consumers.