BUS631: Brand Management

Theoretical Contributions

In this paper, we asked: how is the relationship between customer satisfaction and loyalty in the online environment different in relation to different mediators? This study contributes to the existing knowledge of customer satisfaction and customer loyalty by providing insight into online satisfied consumers' loyalty behavior through an examination of the four influential variables of attitude, trust, hedonic value and utilitarian value, and their mediating effects on the formation of the customer satisfaction – loyalty relation.

Through this study we aimed to address the identified gaps in the existing knowledge of customer satisfaction and customer loyalty in the e-shopping context and outline the results of the proposed research questions. The findings indicate that customer satisfaction leads to loyalty. Additionally, there are mediators that have an impact on the main relationship explored in this paper.

These results indicate another role of attitude and hedonic value in the formation of customer loyalty. Moreover, the factors of commitment, trust, involvement and perceived value are each found to have a different degree of mediation on the customer satisfaction–loyalty relation.

As discovered in this paper, customer satisfaction is not the only predictor of loyalty and there are other possible mediators that should be considered by online marketers. As Chen discovered that perceived value is a complete mediator of satisfaction and loyalty, while commitment, trust and involvement each prove to be partial mediators of satisfaction and loyalty, this study explored other mediators: attitude, hedonic value, utilitarian value and trust.

In the introduction section of this paper, we asked if trust matters when considering an e-tailer, and the answer of the empirical analysis showed that it did not; consumers seem interested in various online retailers, and thus the idea of customer loyalty is not easy to achieve in an ever-changing environment. We also asked whether attitude is an important mediator in this relationship and the result supported hypothesis 3, particularly because consumers can form their attitudes from various online sources, such as corporate or paid, organic and those based on friends' recommendations.

Additionally, it is important for managers to understand how customers perceive hedonic value, and then adopt their perspectives and insights in creating and delivering online services that reflect fun and exciting shopping experiences. In this study, customers determine utilitarian value by product and service pricing, the time and effort they put into online shopping, and the rating of their overall on-line shopping experience. However, utilitarian value did not prove to be an important mediator in this research.

Moreover, this paper echoes Chen's call for a further study of constructs related to satisfaction and loyalty in order to improve the knowledge of motivation in the loyalty formation process, particularly in the online environment. This study contributes in this research direction and brings new insights by identifying the variables of hedonic value and attitude as mediators of the customer satisfaction– loyalty relation in the Internet retailing context, which also leads to a more comprehensive understanding of online consumer behavior.

Managerial Implications

This study not only confirms the causal sequence between customer satisfaction and loyalty in the online context, but also clarifies the essentiality of customer satisfaction in the formation of e-loyalty and ways to approach it in terms of enhancing online marketing programs. Based on our study, we recommend the following strategies and tactics for online service providers of e-commerce:

Use the online medium to reinforce loyalty. Satisfaction builds loyalty, which further reinforces e- satisfaction. E-shopping marketers should consider promoting special loyalty-enhancing initiatives tailored developed for particular and targeted online customers to reinforce their overall satisfaction. Managers should be aware of the importance of on-line shopping in targeting satisfied customers and taking initiatives to recognize and high-light customer interests.

Enhance the interactivity and fun elements of the website. Our results show that a higher level of elements associated with hedonic value increased online service satisfaction, which, in turn, has a mutually reinforcing relationship with loyalty. Managers need to maintain advanced online technologies to ensure user-friendly searching, requiring less time and effort by customers.

Make the website as easy to use as possible. This tactics is necessary for online marketers because it improves customer attitude and satisfaction. The design of the website should encompass easy access to all the relevant information about the products and should be searchable and usable from every user-interface and device (particularly mobile devices) available in order to provide the convenience that online shopping has over traditional purchasing. In this sense, managers should consider the impact of these mediators when managing customer satisfaction for customer loyalty in order to improve the performance of their online shopping sites.

Limitations and Extensions

Our research has some limitations that should be addressed by future research. A major limitation is that we had a general approach in our survey and the study should be extended to provide a more focused view in relation to a particular e-tailer.

Considering the fact that this study implied an international sample, the size of the sample is relatively small, and thus could have impacted the results and the unsupported hypotheses, particularly the one that examined trust as a mediator of the customer satisfaction-loyalty relation. As with most online consumer surveys, the sample was skewed toward younger, more educated demographics. Nonetheless, such consumers are the main target audience for online marketers, however, a larger sample size might have resulted in stronger results for these models.