African Journal of Business Management Vol.6 (22), pp.

6745-6753, 6 June, 2012

Available online at http://www.academicjournals.org/AJBM
DOI: 10.5897/AJBM12.236
ISSN 1993-8233 2012 Academic Journals

Full Length Research Paper

Effects of perceived quality and satisfaction on brand

loyalty in China: The moderating effect of customer
orientation
Hong-Youl Ha* and Kang-Hee Park
Department of Marketing, Kangwon National University, 192-1 Hyoja-dong, Chuncheon, Kangwon-Do, South Korea.
Accepted 9 March, 2012

The domain of customer orientation, perceived quality and brand loyalty has been well documented in
the Western market (for example, Europe and US). However, the afore-mentioned themes are under-
explored in the Chinese market. Therefore, this study investigates the effects of customer orientation,
perceived quality and satisfaction on brand loyalty. Both perceived quality and customer satisfaction
are hypothetically associated with brand loyalty through customer orientation acting as a moderating
variable. Our study of 547 surveyed customers shows that endogenous constructs have an impact on
brand loyalty. Our results present an alternative perspective on the moderating role of customer
orientation. Conclusions and implications are drawn and discussed for brand loyalty development.

Key words: Chinese services sector, perceived quality, customer orientation, customer satisfaction, brand
loyalty.

INTRODUCTION

Over the past decades, there has been a growing
recognition among researchers and practitioners that a
completed understanding of brand loyalty formation
represents a source of global advantage. The marketing
literature acknowledged the need to capture consumer
perceptions at the heart of a companys most valuable
customer group (Genesh et al., 2000: 65). A number of
studies have investigated the advantage of customer-
focused brand loyalty and their potential to achieve super
results (Oliver, 1999; Russell-Bennett et al., 2007).
Some marketing scholars argue that brand loyalty is
gradually declining in both US and Europe over time (Tod,
1984; Kapferer, 2006). East and Hammond (1996) have
showed that the percentage of repeat-buyers tends to
decline, while Dekimpe et al. (1997) have found little
support for the often-heard contention that brand loyalty
continues to decline. Their models that have been used
*Corresponding author. E-mail: ha.h@kangwon.ac.kr. Tel: 82
31 572 8925.
to create a time series of brand loyalty estimates provide
valuable insights for a better understanding of how brand
loyalty is being evaluated, while a different approach is
necessary to establish brand loyalty in emerging markets,
particularly in China. From a theoretical perspective, it is
relevant to understand what key elements make up brand
loyalty. From a practical perspective, it is important to
figure out how brand loyalty can be reinforced in order to
enhance the overall brand experience.
To date, the study of perceived quality, and satisfaction
factors related to brand loyalty have dominated the
service literature. The bases for these discussions have
been both operational and conceptual, with particular
attention paid to identifying the relationships between the
two factors (Brady and Robertson, 2001). This study
particularly focuses on the importance of customer
orientation with these determinants on brand loyalty
because the concept of customer orientation has evolved
into the core of strategic marketing (Jaworski and Kohli,
1991; Luo and Seyedian, 2003; Webb et al., 2000). To
formulate a successful service marketing strategy in the
Chinese markets, companies need a deeper
6746 Afr. J. Bus. Manage.
understanding of how customer orientation plays a
significant role in the relationship between brand loyalty
and its determinants and how it translates into brand
loyalty.
This issue has certainly not escaped researchers
attention as they have tried to relate customer-focused
services in novel ways toward achieving brand loyalty
(Na and Shim, 2010; Ha et al., 2009). Cries for relevant
theoretical perspectives that can breathe new life into
brand loyalty research have been raised (Fournier and
Yao, 1997; Fournier, 1998). The current study responds
to this need by providing an account of brand loyalty that
is tested by moderating effects that have had little
empirical work.
The remainder of this paper is organized as follows:
Background to the study before discussing our model and
hypotheses in more detail. We then turn to the retail
service industries as the context for testing our
hypothesized model. This is followed by a description of
the methodology used for measuring key concepts and
collecting data and lastly key results and their
implications.
BACKGROUND
The traditional model is essentially based on Olsen
satisfaction-loyalty model (2002). The satisfaction-loyalty
model is structured in such a way that satisfaction acts as
a mediator between perceived quality and brand loyalty.
This indicates that quality has only an indirect influence
on loyalty through satisfaction. This approach is also
accordance with the cognition-affect-behavior hierarchy
within expectation-value theory (Eagly and Chaiken,
1993) and supports the loyalty phase framework (Oliver,
1999). In the marketing literature, however, satisfaction
has been also established as a major antecedent of
loyalty (Henning-Thurau, 2004; Oliver, 1997; Shankar et
al., 2003). These literatures generally support the view
that consumers judgments on consumption with a brand
will affect their behavior as loyalty is dependent on
consumer satisfaction.
These approaches have been well developed in the
literature, while consumers often rely on the behavior of
service employees when evaluating their behavioral
sequence. Prior research has focused on the
development of brand loyalty (Chaudhuri and Holbrook,
2001: Oliver, 1997) and reveals there may be two quite
distinct motivations for investigating brand loyalty. One
appears to be a customer orientation-focused motivation
intended to estimate the direct role of determinants on
brand loyalty. For example, researchers investigated the
direct impact of customer orientation on brand loyalty
(Appiah-Adu and Singh, 1998; Dean, 2002). The other
approach focuses on the indirect effect of these
determinants on brand loyalty. From a marketers
perspective, customer orientation may be reasonable to
be understood as a commencement point for the indirect
effect on brand loyalty. While much attention has been
devoted to the foundation on the construct (Brady and
Cronin, 2001; Brown et al., 2002; Kennedy et al., 2003),
the moderating effect of customer orientation on brand
loyalty are relatively limited in the literature. This
precipitates the motivation to investigate the relationships
between determinants of brand loyalty.
CONCEPTUAL MODEL
The hypothesized model proposes that customer
satisfaction mediates the relationship between perceived
quality and brand loyalty. Customer orientation is
proposed to moderate the relative strength of the
relationships between perceived quality, satisfaction and
brand loyalty. The following text offers our rationale for
the proposed relationships between these constructs.
Perceived quality and customer satisfaction
Definitions of perceived quality in a service context
suggest that this is the result of comparisons that
customer makes between his/her expectations about a
service and perception of the way that service has been
performed (Caruana, 2002; Parasuraman et al., 1994).
The most common definition of perceived quality
integrates consumer experience of the service and
perceptions of the firm providing the service (Gonzlez et
al., 2007). Thus, this study conceptually defines
perceived quality as the customers cognitive evaluation
of the overall experience of a brand (bank or department
store).
Over the years, numerous definitions of satisfaction
have been proposed by marketing scholars. After
reviewing the literature on satisfaction, Oliver (1997: 28)
concludes that the wide variation in defining the factor of
satisfaction was best reconciled in the definition of
satisfaction as the summary psychological state resulting
when the emotion surrounding disconfirmed expectation
is coupled with prior feelings about the customer
experience. In this study we define satisfaction as a
summary affective response of varying intensity after the
customer frequently visits a facility (bank or department
store).
Although most marketing researchers accept a
theoretical framework in which quality performance leads
to satisfaction (Oliver, 1997; Olsen, 2002), it has been
suggested that this debate seems to be on the many
studies which only consider the effect of either service
quality or satisfaction on behavioural intentions, but does
not test models that include both of these factors (Brady
and Robertson, 2001; Gotlieb et al., 1994). Such studies
may lead to biased results which potentially overstate the
importance of one or both of these factors in the brand

loyalty formation. Thus the link of perceived quality to
satisfaction on brand loyalty is consistent with Gotlieb et
al.s (1994) suggestion that an empirical examination of
the antecedents and the effects of these two factors are
needed.
On the other hand, previous research provides
considerable support for the predictive effect of perceived
quality on customer satisfaction. For example, Cronin and
Taylor (1992) assess several models and conclude that
perceived quality leads to satisfaction. Lee and Back
(2008) similarly find empirical evidence supporting this
relationship in the branding context. This link has also
been previously established in numerous other quality
studies (Brady and Robertson, 2001; Fornell, 1992; Tse
and Wilton, 1988). The link of perceived quality to
satisfaction is expected to perform the best in terms of
predicting brand loyalty because consumer behavior
theory suggests that cognition (evaluation of service
quality) influences affect (judging the satisfaction for the
service) (Brady and Robertson, 2001). Thus, we suggest
the following:
Hypothesis 1: Perceived quality will be positively related
to customer satisfaction.
Perceived quality and brand loyalty
Brand loyalty can be defined as a deeply held
commitment to re-buy or re-patronize a preferred
product/service consistently in the future, thereby causing
repetitive same-brand or same brand-set purchasing,
despite situational influences and marketing efforts
having the potential to cause switching behaviour (Oliver
1999: 34). This definition emphasizes both behavioural
and attitudinal perspectives, and brand loyalty is
considered as one of the most important factors affecting
consumer choice (Baldinger and Rubinson, 1996). This
research draws on the conceptual work of Dick and Basu
(1994), who propose that customer loyalty is the result of
psychological processes and has behavioural
manifestations, and should therefore incorporate both
attitudinal and behavioural components. In this study,
therefore, we conceptually define brand loyalty as an
attitudinal and behavioural function of an evaluative
psychological process for a particular brand.
Since the link of perceived quality and customer loyalty
is well addressed in the literature, the relationship
between perceived quality and brand loyalty is relatively
limited. For example, the brand equity literature views two
constructs as dimensions of brand equity (Aaker, 1996;
Keller, 1998; Parasuraman and Grewal, 2000; Yoo et al.,
2000), but relatively few studies have focused on the
relationship between the two constructs (Chiang, 1991;
McConnell, 1968). Such a relationship has the potential
to contribute differentially to customer attitudes and
behaviors, because the strength of brand loyalty could be
Ha and Park 6747
explained by perceived quality (McConnell, 1968). Thus,
we hypothesize the following:
Hypothesis 2: Perceived quality will be positively related
to brand loyalty.
Customer satisfaction and brand loyalty
A number of empirical studies show that satisfaction is an
antecedent of brand attitude, brand repurchase intention,
and attitudinal brand loyalty for consumer retailing
services (Oliver, 1980; Pritchard et al., 1999; Russell-
Bennett et al., 2007). Satisfaction is found to increase
loyalty when brand loyalty is measured in a number of
successive purchases of the same brand (LaBarbera and
Mazursky, 1983). Similarly, research has shown that
evaluation of a retail service following purchase and
consumption leads to two aspects of brand loyalty--
purchase loyalty and attitudinal loyalty-- which play a
critical role in determining whether the consumer will
purchase that service again (Bennett, Hrtel, and McColl-
Kennedy, 2005; Chaudhuri and Holbrook, 2001).
However, research on satisfaction and brand loyalty from
the context of Chinese retailing services is not well
documented. Thus, the following hypothesis is arrived:
Hypothesis 3: Satisfaction will be positively related to
brand loyalty.
The moderating role of customer orientation
Since considerable research has shown that
organizations are more successful when they embrace a
customer orientation, the literature tends to focus on
descriptive of the process for implementing this desired
orientation (Kennedy et al., 2003; Luo and Seyedian,
2003). These studies have focused on the construct of
how an organization adopts a customer orientation by
refining understanding of market performance, while
another approach is to address the role of customer
orientation of how customer-oriented services translate
into service performance perceptions and behavioral
outcomes. From a customer perspective, we conceptually
define customer orientation as a practical level of a firms
employees which are perceived as the application of
employees specialized activities, through identifying,
analyzing, understanding, and answering customer needs
for the benefit of the entity itself (Vargo and Lusch, 2004:
326).
To date, most of the available research examines the
direct relationship between customer orientation and
loyalty or repurchase intentions (Brady and Cronin, 2001;
Hennig-Thurau, 2004; Deshpand et al., 1993), but there
is little research that addresses the moderating effect of
customer orientation on service quality/customer
6748 Afr. J. Bus. Manage.
satisfaction-loyalty relationships. Building from the
reasoning, we anticipate that high levels of customer
orientation will reinforce overall the positive effect of
perceived quality and satisfaction on customers intent to
stay with a particular brand. Customer-oriented firms
outperform competitors by anticipating the developing
needs of consumers and responding with goods and
services to which superior value and greater satisfaction
are consistently attributed (Brady and Cronin, 2001).
However, if a firm feels the relationship between
satisfaction and loyalty is ambiguous, the firm might
enhance brand loyalty when customers benefit from a
high practical level of a firms employees. As a result,
they might remain locked in with the same brand by
their willingness to stay or repurchase.
On the other hand, when firms consistently identify and
then satisfy the desires of customers, they accrue a
positional advantage over competitors as reflected in
growing sales and building loyal customers (Hult and
Ketchen, 2001; Zhu and Nakata, 2007). One reason is
that customers perceive that the firm offers greater value
in its products and services. As satisfied customers are
likely to be loyal, the notion of positional advantage
suggests that greater customer orientation corresponds
with the reinforcement of the link between satisfaction
and loyalty. Thus, we hypothesize the following:
Hypothesis 4: The positive relationship between
satisfaction and brand loyalty will be stronger where
customers benefit from customer orientation.
Customers remain with the brand when service quality is
less ambiguous. Despite the advancements of both the
strategy and service literature in understanding the
mechanisms that govern the effects of perceived service
quality on brand loyalty, firm performance could be
improved if there is an identical effect on customers
perceptions of a firms customer orientation (Brady and
Cronin, 2001). For example, firms attempting to increase
brand loyalty must be especially sensitive to market
reactions to service offerings, because those reactions
hold insight on how best to deliver on high levels of
service quality. As those reactions are reflected in
customer orientation, if a firm is intent on fulfilling the
deepest wants of current and prospective customers, it
refers to customer orientation measures (Zhu and Nakata,
2007) in order to monitor how well the link between
perceived service quality and brand loyalty is
accomplished. Equally, it could be argued that customers
who perceive a high practical level of a firms employees
would evaluate overall quality provided by employees
and then, they form their intentions to stay or repurchase
with the brand. On the basis of these arguments, we
finally suggest the following:
Hypothesis 5: The positive relationship between
perceived quality and brand loyalty will be stronger where
customers benefit from customer orientation (Figure 1).
METHODS
Data collection
Data was collected from the department store industry. The
customers purchased their products and services during March to
June of 2008 across-national China. The service was chosen
because customers in this service had direct contact with the firms.
The wide variety of service types in the department industry allows
for variance on the relevant independent and dependent variable.
Respondents were screened before the questionnaire was
administrated to make sure that they were familiar with the service
context in question. For research survey, respondents were
intercepted in the customer service lounge at targeted multiple
stores. This method of sampling was chosen as it was easy to
target respondents with previous service experience. The main
criteria for selecting participants for the sample was a minimum of
two years experiences shopping at department stores with at least
five purchases during that period. Trained interviewers indicated the
information would be used by university researchers and offered
assurances of confidentiality.
Self-administered surveys were distributed to 600 current
customers from the selected industries. After accounting for sample
bias and missing data, this study used a total of 547 questionnaires,
which represents a 91.2% response rate. Respondent demographic
characteristics showed that approximately 53% of the group was
female and 21% were older than 41 years of age.
Following Armstrong and Overtons suggestion (1977), we
assessed non response bias through a series of t-tests that
compared early (responses to the initial survey) with late
(responses to the follow-up survey) respondents in terms of all key
constructs. The results suggested that there was no significant
difference between early and late respondents on the key variables.
Measures
The four factors were measured using twelve questions (responses
on five-point Likert scales) adapted from published scales (Table 1).
Customer orientation was measured with four items adapted from
Saxe and Weitz (1982). Perceived quality was measured with three
items adapted from Yoo et al. (2000). Satisfaction was measured
with two items adapted from Ragunathan and Irwin (2001). Brand
loyalty finally was measured with three items adapted from Yoo and
Donthu (2001).
All survey questions were originally written in English and
translated into Chinese. To make sure that the translation was
accurate, the translation and back-translation method was utilized.
As the translation should be written in the appropriate Chinese
language spoken by a Chinese population at the specific time, two
researchers were consulted on the wording and understandability of
the Chinese language survey. Overall, there was an acceptable
good fit between the back-translated versions and the original
version, indicating that the Chinese survey had a high level of
translation quality.
Control variable
We controlled industry type as the characteristic has been shown to
moderate the relationship customer orientation and business
performance. For example, Sin and colleagues (2005) found that
gender difference is significantly influenced by the moderating
effects of industry type in a transitional Chinese economy. In this

Customer
satisfaction
H4 (+)
Customer
H1 (+) orientation
H5 (+)
Perceived
quality
Figure 1. Conceptual model.
study, we asked respondents to indicate their responses according
to their sexes as either male (1) or female (2).
Common method bias
To determine the presence of common method variance bias
among the proposed variable, a Harmans one factor test (1967)
was performed following the approach outlined by previous
researchers (Mattila and Enz, 2002; Podsakoff et al., 2003). All self-
report variables were entered into a principal components factor
analysis with varimax rotation. According to this technique, if a
single factor emerges from the factor analysis, or one general
factor accounts for over 50% of the covariation in the variables,
common method variance is present (Mattila and Enz, 2002: 272).
Our analysis revealed a three-factor structure, with each factor
accounting for less than 50% of the covariation. Thus, no general
factor was apparent.
RESULTS
Measurement model
We first assessed the measurement model followed by
hypotheses testing according to the guidelines suggested
by Anderson and Gerbing (1988). We conducted
exploratory and confirmatory factor analysis (CFA) to test
for convergent validity. First, from a statistical perspective,
the item-total correlation was considered, and values that
were well below other item-total correlations were
targeted for deletion. Next, based on initial CFA results,
any item that loaded less than 0.50 on its intended
construct were candidates for deletion. As a result of
applying these guidelines, one item from the original
Ha and Park 6749
H3 (+)
Brand
loyalty
H2 (+)
customer orientation scale and two items from the brand
loyalty scale were dropped from the original pool of items.
When the resulting pool of items for customer
orientation, perceived quality, customer satisfaction, and
brand loyalty were subjected to an exploratory factor
analysis with the principal factor as the extracted method
followed by a varimax rotation, four factors emerged that
corresponded to how we had initially measured these
constructs.
We further subjected the resultant pool of items to a
CFA using AMOS 6.0 with the covariance matrix as input.
The measurement model suggested good fit to the data,
(48) = 173.464, p < 0.01, comparative fit index (CFI) =
0.952, non-normed fit index (NNFI) = 0.934, goodness-of-
fit (GFI) = 0.950, adjusted goodness-of-fit index (AGFI) =
0.918, and root mean square error of approximation
(RMSEA) = 0.069. The results of the CFA with factor
loadings and t-values are summarized in Table 1.
All factor loadings were relatively high and significant,
providing strong evidence for convergent validity
(Bagozzi and Yi, 1988). Support for convergent validity is
also demonstrated by the high average variance
extracted (AVE) for all four constructs (Bagozzi and Yi,
1988). All AVEs exceeded the recommended level of 0.50,
rating from 0.598 (customer orientation) to 0.788
(satisfaction).
Discriminant validity was assessed by calculating the
shared variance between pairs of constructs and verifying
that it was lower than the average variances extracted for
the individual constructs (Fornell and Larcker, 1981). As
shown in Table 2, the shared variances between pairs of
all possible scale combinations indicated that the
6750 Afr. J. Bus. Manage.

Table 1. Results of the CFA analysis.

Construct Factor loading t-Values

Customer orientation 0.777
Employees go beyond normal call of duty to please customers. 0.758 16.43
Employees understand what product attributes customer value most. 0.672 14.73
Employees are given adequate resources to meet customer needs. 0.561 12.26
Employees understand customers real problems. 0.730 15.99
Composite reliability 0.856
Average variance extracted 0.598

Perceived quality 0.728

The store is of high quality. 0.717 14.73
The likelihood that the store is reliable is very high. 0.690 14.16
The likely quality of the store is extremely high. 0.665 13.71
Composite reliability 0.848
Average variance extracted 0.651

Satisfaction 0.730
Overall I am satisfied with specific experiences with the store. 0.747 15.72
I am satisfied with my decision to purchase from this store. 0.774 16.07
Composite reliability 0.881
Average variance extracted 0.788

Brand loyalty 0.797

This store would be my first choice. 0.721 14.84
I consider myself to be loyal to this store. 0.730 15.01
I will not buy other brands if the same product is available at the store. 0.717 14.78
Composite reliability 0.881
Average variance extracted 0.712

Table 2. Discriminant validity (N = 547).

Construct 1 2 3 4 M SD
Customer orientation 0.59 3.42 1.01
Perceived quality 0.38 0.65 3.63 0.95
Customer satisfaction 0.46 0.51 0.78 3.54 0.89
Brand Loyalty 0.42 0.46 0.55 0.71 3.55 1.04
The diagonal entries (in bold italics) represent that the average variance extracted by the dimension; the off-diagonal entries represent the variance
shared (squared correlation) between the dimensions.

variances extracted were higher than the associated
shared variance in all cases.
Hypotheses testing results
This study first tested the relationship between
satisfaction and perceived quality (H1) using regression
analysis procedure and then we used hierarchical
moderated regression analysis to test our hypotheses
(Cohen, 1988). In doing so, two models were developed.
One is the main-effects model (M2) excluding
interaction terms and the other is the interaction model
(M3) including the interaction effects. All scales were
averaged to form a composite. Once the composites
were formed we mean centered the constructs to avoid
any potential threat of multicollinearity when calculating
the interaction terms (Aiken and West, 1991).
As expected, regression analysis supported H1 at p <
0.01 (b = 0.38). We now turn to test our hypotheses

Table 3. Assessment of main effects and moderating effects.
Hypothesis Model b (t-value)
Controls
Gender 0.03 (0.76)
Direct effects
Perceived quality (H2)
Customer satisfaction H3)
Interaction effects
Customer satisfaction
Customer orientation (H4)
Perceived quality
Customer orientation (H5)
R 0.01
Adjusted R -0.00
F-model 0.59
F 227.68*
Effect size (ES) 0.80
*Significant at p < 0.01 level; **Significant at p < 0.05 level;
model and M = main-effect model.
including the interaction effects. In Table 3, Models 1 to 3
used brand loyalty as the dependent variable. We used
Model 1 to test the effects of the control variable on brand
loyalty, and then added the main effects of the antecedent
variables (perceived quality and satisfaction) in Model 2,
which contributes 44% more variance explained than the
control variable. Model 3 (R = 49%, ES = 0.08) included
the control variable, main effects, and the hypothesized
two-way interaction terms. In particular, Model 3 shows
the results of our hypotheses testing. The interaction
effects were significant, granting an additional 4 percent
to the explanatory power of the model. No control
variable approached significance.
Hypotheses 2 and 3 stated that perceived quality and
satisfaction would be positively related to brand loyalty.
This is a test of the main effects on brand loyalty. Both
hypotheses were supported in that the effects of
perceived quality (b = 0.31; p < 0.01) and customer
satisfaction (b = 0.25; p < 0.01) on brand loyalty were
significantly positive. Next, we checked the moderating
effects to test H 4 and 5, which stated that the positive
relationship between perceived satisfaction/quality and
brand loyalty would be stronger where customers benefit
from a high practical level of a firms employees. Results
from Model 3 show that the positive effect of customer
loyalty on brand loyalty is bolstered with a high practical
level of customer orientation, in support of H4 (b = 0.19; p
< 0.05). Perceived quality on brand loyalty is significantly
moderated by customer orientation, in support of H5 (b =
0.24; p < 0.01). We summarize the results in Table 3.
Ha and Park 6751
Main-effect model b (t-value) Interaction model b (t-value)
0.02 (.50) 0.04 (1.22)
0.40 (10.04)* 0.31 (7.49)*
0.35 (8.72)* 0.25 (5.88)*
0.19 (4.74)**
0.24 (5.81)*
0.45 0.49
0.44 0.48
152.15* 130.27*
35.57*
0.08
ES = R IM
2
R M2 / 1 R IM
2
; where IM = interaction
DISCUSSION
Overall we find support for all hypotheses in our
proposed model. The main effect of perceived quality on
satisfaction would come as no surprise to researchers,
while the current finding highlights that the link of
perceived quality to satisfaction performs the best in
terms of predicting brand loyalty. This effect is stronger
than other main effects. This is consistent with Brand and
Robertson (2001) who suggest that cognition (evaluation
of service quality) influences affect (judging the
satisfaction for the service). Our first result suggests that
retail service firms whose brand loyalty process is not
well developed are able to survive from the improvement
of service quality.
The relationship between satisfaction and brand loyalty
has been well researched in consumer markets, focusing
mainly on fast moving consumer goods (Fournier and
Yao, 1997; Oliver, 1997). Consistent with past findings
from consumer studies, the pattern of results reported
here suggests that satisfaction is antecedent to brand
loyalty, at least in the Chinese context studied. When
consumers visit retailing service stores, they are more
likely to be satisfied with the outcome, which leads to
improving brand loyalty. As respondents are repeat
customers, this may become an issue for repurchasing
behaviors that become automated over time, such as
straight repurchase. In this case, as customer satisfaction
level increases with the nature of service quality
perceptions, the level of brand loyalty is also increased.
6752 Afr. J. Bus. Manage.
Our findings highlight the significant moderating effects
between perceived quality and customer orientation and
between satisfaction and customer orientation on brand
loyalty. The results suggest that customer orientation has
an impact on the way in which customers evaluate the
brand through both cognitive and accumulate points of
view. These findings provide a starting point for
unrevealing some confusion on brand loyalty formation in
the literature regarding the role of customer orientation in
customers decision making process. More specifically,
the reinforcement of both constructs on brand loyalty is
contingent upon a high level of customer orientation. In
Chinas retailing service circumstances, it becomes more
important for brand loyalty formation so that the service
organization guides customers need to reinforce their
judgments.
Managerial implications
Several managerial implications emerge from this study.
By combining the theoretical perspectives that examine
customer orientation at the individual levels of
measurement, a more complete view of the effects of
customer orientation on brand loyalty formation can be
seen. Previous studies that have underestimated the
possible influence of moderators, have omitted a key
driver. If customers needs are well managed by service
employees, customer-oriented firms will be consistently
perceived as having better service quality and delivering
customer satisfaction. Furthermore, this effect is not only
evidence for perceptions of the services cape, but also a
fundamental process for the reinforcement of brand
loyalty.
Service firms collect customer-focused data to reinforce
brand loyalty, but the current study suggest that when the
data become a shared firm-wide platform from which
strategic decisions are made, a customer orientation
prospers and become self-reinforcing (Kennedy et al.,
2003). Since customer orientation is the belief that
understanding and satisfying customer needs should be a
firms priorities (Luo and Seyedian, 2003), our empirical
findings also suggest that all members of a firm must
continuously create superior value for customers, and
must do so better than the competitors. This has
advantages for improving market performance and
reinforcing brand loyalty.
LIMITATIONS AND FURTHER RESEARCH
As with any empirical study, our study also has some
limitations, which may provide other promising avenues
for further research. The studys focus on retailing
services may limit the extent to which the findings can be
generalized. It is plausible that the nature of the observed
relationships would change with services that are higher
or lower in credence properties (for example, higher
private hospital, top-quality hotel, and legal services,
respectively) as the potential for customer building
expertise is like to vary significantly across these
industries (Bell et al., 2005). This could provide insights
on the possible generalization of customer orientation
when researchers focus on the development of brand
loyalty formation. This would be an important extension of
the current study.
Another potential limitation of our study is the range of
constructs we applied to indicate brand loyalty formation.
A possible direction for further research involves testing
the different role of satisfaction and perceived quality as
antecedents of brand loyalty. This type of research would
highlight the differences in brand loyalty formation and
maintenance. Since the role of perceived quality is still
strongly supported by the literature, the research model
may need to be adapted for situational cases of brand
loyalty formation.
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