Analyzing the Impact of Brand Trust on Brand Loyalty (Case Study:Yas Arghavani Co.)

Abstract

The objective of this paper is to analyze the impact of brand trust on brand loyalty in Yas Arghavani Co. In doing so, a main hypothesis and nine secondary hypotheses are posited. The secondary hypotheses concern the impact of various brand trust dimensions, including consumer satisfaction of the brand, brand reputation, company reputation, consumer trust, consumer brand experience, company honesty, brand predictability, brand identity, brand competence, on brand loyalty. This paper presents the results of a descriptive corelational survey. The theoretical framework is developed through desk research while a field study is conducted to collect the required data. The statistical population includes all of the company’s customers, of which a stratified multistage random sample of 381 is drawn. Data were gathered using a questionnaire developed by the authors. A group of experts confirmed the validity of the instrument while reliability was demonstrated by calculating Cronbach’s alpha, yielding an acceptable value of 0.77. For analysis purposes, structural equations modeling and confirmatory factor analysis were performed via the SPSS and LISREL statistical software environments. Descriptive results indicate that attitude toward brand loyalty as well as brand trust and its dimensions in Yas Arghavani Co. are significantly greater than average. According to the results, for a confidence interval of 99 percent, brand trust and its dimensions including consumer satisfaction, brand reputation, company reputation, consumer trust, consumer brand experience, company honesty, brand predictability, brand identity, and brand competence, significantly impact brand loyalty among customers.

Keywords: Brand trust, Customer brand loyalty, Customer brand satisfaction, Company honesty, Yas Arghavani Co.

Introduction

Today, all successful organizations and companies strive to focus on their customers. These organizations strive to focus on their costumers and being customer-centered is their highest priority. In the modern world of competition, only creativity and innovation geared toward satisfying customer needs and expectations guarantee an organization’s survival. This is reflected in the increasingly fierce competition between companies to attract loyal customers. A critical issue for managers is to better understand how the concepts of brand and customer loyalty relate to each other. Marketing management literature has identified a host of factors which may influence customer loyalty (Leong and Michael et al., 2001).

Brand loyalty is the result of performance which exceeds customer expectations such that the customer feels delighted and surprised by the provided value. Loyal customers substantially contribute to the firm’s long-term profits. A brand, as a representation or symbol of the company, serves as a communication platform between the customers and the company and plays a key role in the formation and continuity of the relationships between the two parties. Brand identity refers to a set of elements that together make up its identity and lead to identification and recognition of the brand in consumers’ minds (Ebrahimi et al., 2012).

Brand identity determines how a company wants to be perceived in the market. In today’s world, manufacturers are moving away from production-based and price-based strategies and toward those based on brands. Advantages of brands for firms include higher customer loyalty, increased profitability, preventing the entry of new competitors, reduced vulnerability to competition, and lower advertisement costs (Azizi et al., 2011).

Contemporary organizations ensure continued survival by satisfying customer needs and expectations, instead of relying on capital. Achieving organizational goals, attaining success, and creating a strong brand are among the primary goals of any organization or institution. Therefore, it is essential to study the factors that contribute to improving performance and expediting goal attainment. The significance of the matter manifests in the increasingly fierce competition to attract customers, on whom the long-term success of the company depends. However, one-time customers are much less important compared to their loyal counterparts. Creating loyalty is a long-term endeavor which requires communication with the customer. As a representation and symbol of the company, a brand embodies a means of communication between the consumer and the company; thus, to create loyalty and gain the associated benefits, customer trust must be gained. In other words, trust is an antecedent of loyalty. Therefore, in order to develop loyalty and gain the associated benefits, customers must come to trust the brand. A number of factors including business globalization, advances in technology, rapid changes in competitive markets, and higher costumer expectations have resulted in the ever-increasing significance of brand loyalty in achieving goals as well as carrying out tasks and missions. Quite a few variables can impact brand loyalty; to the best of our knowledge, no study considers a total of ten variables simultaneously. Furthermore, the gap in Iranian literature also justifies the need for this study. Although the topic of brand has been extensively studied, only a few papers explore the impact of brand trust on customers’ brand loyalty. The majority of studies on the factors that influence brand loyalty have been performed in the tourism industry. The issue assumes even greater significance due to the fact that a deep investigation into the relationship between brand trust and brand loyalty in Iran is lacking. Thus, this paper can assist organizations in achieving their goals and ultimately bridge the gap in extant literature.

The activities of Yas Arghavani Co. are focused around information technology in financial and market systems the performance of which is affected by extremely important factors. Indeed, in this study, we seek to answer the following question: Does brand trust impact brand loyalty among customers of Yas Arghavani Co?

Theoretical Background

Brand personality

Customers tend to attribute human characteristics to brands; such perceptions are often created or enhanced by marketers through positioning. Brands are believed to be among the most valuable assets of a company or organization which ultimately add value to the product. Today, customer loyalty is regarded as the key to business success. An understanding of the market creates long-term benefits for business through careful planning and appropriate strategies that generate or enhance customer loyalty (Kryystallis, and …, 2014). Brand personality is known as the core and the closest variable in customer decision-making (Nasiripour et al., 2010). Wysong et al. (2002) state that the attribution of human characteristics to brands attracted considerable research attention in the 1980s and 1990s. The authors believed that brands and products have personalities that may be constructed or destroyed in the market. Thus, it is easy to see that brands can possess human-like characteristics. This is why branding literature relates human characteristics to brands. Companies with strategic brand positioning are able to have a much greater impact on consumer perceptions compared to more stable and gradual methods.

Brand value

Brand value is a “name, phrase, design, symbol, or a combination of these elements which determines the identity of a service organization and distinguishes it from its competitors”. The value is judged by one’s intelligence, logic, feelings, and emotions. Furthermore, creating a sense of comfort and ease is the role of a planned brand since the brand is correlated with the customers’ personality, lifestyle, ideals, and behaviors. A brand determines the origins of a product and/or service provider; assigns responsibilities to manufacturers, reduces search costs, and increases product quality (Jalalzadeh, 2009). In his book “Building Strong Brands”, David Aaker argues that recognition is the basis of a strong brand. According to Aaker, brand recognition is a set of associations that the brand strategist aims to create and maintain (Kazemi Rad, 2009).

Brand as Product: consists of attributes, quality, and scope of a brand’s products. Other dimensions include being in the right place at the right time to take advantage of opportunities; consumers who determine the positioning of the brand; and brand relationships with the originating country which lead to higher credibility.

Brand as Organization: primarily focuses on organizational characteristics and includes innovation and customer-centeredness. This perspective includes both global and local aspects; the company needs to decide whether to pursue local or global markets. A local strategy through customer relationships can lead to a better understanding of customer needs whereas a global strategy considers long-term brand sustainability and guarantees its future.

Brand as Person: consists of the brand’s personality, referring to a set of human-like attributes related to a brand. These may include gender, age, interests, and attention.

Brand as Symbol: according to Aaker, a strong symbol can act as the basis for brand personality and recognition, resulting in greater brand recognition and recall among customers. Aaker argues that visual techniques such as the use of imagery can serve as the most effective ways of creating symbols for a brand (Kazemirad, 2009).

Brand Perception

Brand perception refers to the overall evaluation of a brand by the customer (Lam & Shankar, 2014). General perceptions of a brand reflect how it is perceived and its overall position and image. High levels of brand awareness lead to positive brand perceptions. Firms often develop their brands to introduce new products, which is an extremely high-risk activity that may damage the brand perception (Doaei and Hasanzadeh, 2010). Brand development has been shown to impact brand perception. Furthermore, brand positivism impacts customer evaluations of a brand, thus influencing its development and the subsequent success (Elaverta et al., 2009).

Brand Loyalty

Loyalty is an important strategic focus which forms the basis for developing competitive advantage (Dos, 2015). Keller (2003) introduces brand loyalty under the new concept of resonance which represents the nature of customer-centered relationships as well as the extent to which customers are in harmony with the brand. Through brand resonance, customers become highly loyal, actively engage with the brand and share their experiences with each other. These definitions of brand loyalty show a direct relationship between the concept and brand equity.

The main reason for distinguishing between various definitions of loyalty lies in the fact that its type and the relevant strategy used to develop loyalty among customers must be determined. Clearly, customers with revealed loyalty can become committed to a brand via appropriate and simple strategies. However, a more complicated strategy is required for those with expressed loyalty. Strong brands evolve and achieve excellence by changing customer needs and wants (Doyle, 2013). According to Dalton (2003) three factors drive customer loyalty: value, trust, and going the extra mile. The author goes on to argue that customers remain loyal to those that help solve their problems, and even go beyond what is expected of them.

Hiscock (2001) defines a loyal customer as one who purchases from the same brand, encourages others to buy the brand, or tries to buy more of that brand.

Perceived Quality

It is defined as the customer’s overall perception of quality or excellence of a product/service based on its purpose and compared to other products/services in the market. Perceived quality is necessary for competition with many companies now using it as a strategic tool. Customer satisfaction is achieved by continuously fulfilling customer quality requirements. Kotler explores the inner relationship between product/service quality, customer satisfaction, and company profitability (Krystallis and Chrysochou, 2014).

Brand Awareness

Brands are different in terms of their strength and value in the market: some brands are unknown for most customers while customers are highly aware of others. Aaker defines brand awareness as the ability of the customer to recognize and recall that a brand belongs to a particular group of products. Brand equity is attained once customers are highly aware of the brand and several unique and desirable associations remind the customer of the brand. Those who once buy a brand are not loyal to the brand; however, five or more purchases of a brand lead to stronger recall of the brand (Magda, 2013).

Brand association

Brand associations concern brand-related connections in one's memory. They may be seen in the form of product-related attributes or aspects that are independent from the product. Associations form a basis for customer purchases and loyalty; moreover, they create value for both the company and its customers. Brand associations have been identified as critical elements in creating and managing brand equity. Thus, a strong brand equity is indicative of positive associations in the customers' minds (Seyed Javadeyn and Shams, 2007).

Relationships between consumer personality and brand personality

Consumers often attribute human-like characteristics to brands. These are often exploited by marketers to create or enhance brand positioning. Brand personality results in emotional or symbolic values that help brand preferences and are more durable than functional characteristics. In order to successfully position a brand personality, one needs measurement models capable of distinguishing between the unique traits of the brand and those shared by all brands in a product category. Consumers come to form perceptions of brands by generalizing human personality traits to brands. As a result, brand personality dimensions are defined as generalizations of human personality traits(Krystallis and Chrysochou. P., 2014).

Brand trust

Hiscock (2001) suggests that the ultimate goal of marketing is to create strong relationships between consumers and brands, which requires trust as its main antecedent. Considering brand trust as an expectation, the feeling of trust is formed by the fact that the brand enjoys certain qualities such as stability, competence, honesty, and responsibility. This is consistent with recent studies on trust. It plays a major role in establishing long-term relationships with customers (Lee et al, 2015). Trust is defined as expectation of reliability. Thus, brand trust has two components that reflect two differing perspectives. Chaudhuri and Holbrook (2015) define brand trust as a consumer's tendency to rely on the ability of the brand to fulfill its promises. Furthermore, in an environment where customers are vulnerable, trust reduces uncertainty. Developing and extending a better understanding of the relationship between factors such as brand trust and performance is a major concern for brand managers. A large number of factors that affect brand performance have been identified in branding literature (Nayebzadeh and Shahbazi, 2013).

Brand trust model

Moorman and Zaltman (1992) define trust as an overall expectation of how likely a person is to perform differently in the future. Brand satisfaction, competence, reputation, company honesty, consumer trust and the fit between consumer self-concept and experiences deeply impact brand trust and subsequently lead to trust between the buyer and the seller. Therefore, brand satisfaction competence, reputation, company honesty, consumer trust and the fit between consumer self-concept and experiences significantly impact trust by increasing confidence in the fulfillment of promises (Krystallis and Chrysochou, 2014).

Brand predictability refers to the ability to predict behavior which allows consumers to rationally predict the behavior of the product (Shamoushaki, 2006).

Brand competence is the ability of a brand to solve the customers’ problem and satisfy their needs. It has also been defined as the extent to which a consumer believes that the company possesses sufficient experience and expertise to perform its duties efficiently and effectively (Lam & Shankar, 2014).

Brand reputation is based on the extent to which a brand is deemed good or reliable (Shamoushaki, 2006). For instance, the relationship between brand reputation and purchase decisions, attitudes toward the product at the time of purchase, perceived quality, and preventing competitor entry are among such relationships.

Brand identity involves the visual elements of a brand (e.g. colors, designs, logos, symbols, and names) all of which help in recognition and identification of the brand in the consumers’ mind (Embrahimi et al., 2012).

Consumer satisfaction with the brand is defined as the result of the consumer’s evaluation regarding the extent to which his/her expectations have been met (Lam and Shankar, 2014).

Company reputation is deemed as a strategic resource which can be defined as the sum of customer evaluations of the company’s activities which explain its ability to provide value and benefits to its multiple stakeholders (Owing, 2010).

Consumer trust of the company represents promising and positive expectations of the dealing side in risky situations (Shamoushaki, 2006).

Consumer experience refers to the experiences consumers have with the brand (Shamoushaki, 2006).

Company honesty consists of the consumer perceptions of the company being true to principles of ethics and integrity. Honesty includes a level of confidence which the consumer has in the intimacy of the business implying that the other party lives up to his promises (Shamoushaki, 2006).

Previous Works

Table 1 summarizes previous works on the topic of this paper.

Table 1. A summary of previous studies

Hypotheses

The following hypotheses are postulated in this paper:

H1: Consumer satisfaction influences brand loyalty.

H2: Brand reputation influences brand loyalty.

H3: Company reputation influences brand loyalty.

H4: Consumer trustof the company influences brand loyalty.

H5: Consumer brand experience influences brand loyalty.

H6: Company honesty influences brand loyalty.

H7: Brand competence influences brand loyalty.

H8: Consumer predictability influences brand loyalty.

H9: A fit between the costumer’s self-concept and brand personality influences brand loyalty.

The conceptual model of the study is shown in Figure 1.