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CHAPTER TWO LITERATURE REVIEW 2.1 Introduction

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

In this chapter, the researcher gives discussion of the theoretical of Brand Image as well as

Customer Loyalty. There are various related brand image theories as well as customer loyalty

theories. This study will benchmark on both the theory of brand culture and customer loyalty

model to examine the effects of Vodacom brand image on customer loyalty towards customer

satisfaction in Arusha.

2.2 Theoretical Literature Review

2.2.1 The Theory of Brand Culture

Doyle, (1990) observed that marketing world today is kind of like a blindfolded chef stumbling

around in a kitchen trying to find a new model of branding. It is a rather painful situation, given

all the sharp knives and such. It proposes that the old model of branding, based on creating an

external, sometimes fictional, brand image, is dead killed by the fact that people just do not

buy a manufactured brand image anymore. People today want the truth.

2.2.2 The model of customer loyalty

The general proposition behind the model concerns the evolutionary nature of the customer

supplier relationship (Ford, 1980; Dwyer, Schurre Oh, 1987; Wilson, 1995). Starting with the

purchase decision and evolving up to loyalty. The stages of the model are defined by different

constructs and relational strength, and can be described as follows.

The satisfaction and trust stage: when perceived value, in the customer’s perspective, meets or

exceeds the expected value, satisfaction is generated; customer satisfaction, purchase after

purchase, enhances the perception of supplier’s reliability, strengthening a positive attitude,

defined as trust, and allowing the development of relationship towards loyalty (Morgane Hunt,

1994)
The trust and the behavioral loyalty: trust a positive effect on the customer repurchase and

structural costs (Costabile, 2000); these “repurchase economics” cause a behavioral loyalty.

The length of this stage depends on competitive and technological pressures operating on

behavioral loyalty is not ever ending. During the life cycle some “conflicts” could emerge

(Iacobucci and Zerrillo, 1997), and a comparison between the value offered and experienced

by the supplier and the value proposition made by its competitors usually occurs (Woodruff

and Gardial, 1996). The positive resolution of the conflict is based on a monadic value analysis

that regards the ratio “customers benefits/customer sacrifices” experienced by the customer

and compared with the same ratio offered by competitors. If the supplier ratio (value) is

perceived as higher than competitors, not including the switching cost, the customer become

mentally loyal; otherwise its loyalty is only explained by switching cost.

Mental loyalty can be defined as a strong belief of the supplier’s capability in satisfying the

customer requirements over the time, always offering “the best value proposition”. The

customer mentally loyal has a very strong relationship with the firm thus it usually will generate

positive word-of-mouth and will unlikely switch. The customer loyalty stage: a long-time

customer has enough information to compare the perceived value he got from the relationship

over the time and the value that is longevity has created for the supplier. Both the common

sense belief that loyalty over time creates extra-value for the firm, and the learning

opportunities that a long relationship gives to the customer about the products, the firm and its

economics, push the customer to analyze the equity, both in each single transaction and in the

relational perspective.

At this advanced stage of the relationship, when the customer knows very well the supplier’s

behavior, a dyadic analysis becomes the central focus of the customer evaluation. The dyadic

value perception concerns the equity (Oliver and Swan, 1989) in the customer-supplier history.

This evaluation is usually done when a second conflict rises focusing customer attention on the
supplier “fairness” (versus “opportunism”). The positive resolution of this second conflict –

given by the perception of equity that build the belief that the supplier adopted a fair behavior

over the time – leads to the optimal stage of the relational continuum: the customer loyalty. A

loyal customer is a collaborative one, and its behavior will be aimed to co-operate in building

a long lasting relationship, also when contextual or competitive variables play against the

loyalty option (proactive loyalty – Oliver, 1997 and 1999)

2.2.3 Description of Brand Image

Keller (2003), it is a set of mental associations in customers’ perceptions which increase the

value of products or services. The brand is an intangible and conditional asset for a company

which has a capability to generate profitability of the firm and compromise the functional and

emotional value (Martisiute et al, 2010). According to Business Dictionary (2013), “the

impression in the mind of customers of a brand’s total personality which may be imaginary or

real shortcomings and qualities is called brand image”. It is developed through advertising

campaigns with consistent theme over time, and is validated through the direct experiences by

the customers. The reputable brand image enables the customers to distinguish their needs that

the brand fulfils and it differentiate the company from others and enhances the customer

performance over the brank (Hess and Story, 2006).

The favorable brand image in the mass market is very important in order to enhance market

share of the company. According to Keller (2003), “brand image is the set of beliefs, ideas and

impression that a person holds regarding to an object” (p.23). In addition, Koo (2003) added

that brand image is useful to drive loyalty, brand equity, brand performance and purchasing

habits of customers. According to Faircloth et al, (2001), brand image has been conceptualized

and operationalized in many ways. It has bene assessed based on brand values/benefits (Hsieh

et al, 2004; Bhat and Reddy, 1998), and attributes (Koo, 2003; Kandampully and Suhartano,

2000) or using brand image scale proposed by Malhotra (1981). The measurement of brand
image based on the above facts could assist organization or marketers to identify the strengths

and weaknesses of the particular brand and perceptions of consumers towards their services or

products as well. The benefits of image can be divided into experiential, functional and

symbolic advantages. The experiential advantages indicates to ‘what it felt like to use the

services or products and generally associated with product related attributes’ (Nandan, 2005).

The functional benefits are associated with the intrinsic benefits of services or products

consumption and generally associated to the attributes related to products. Similarly, the

symbolic advantages were related to the underlying needs for individual expression or social

approval and outer-directed self-esteem which generally associated to the attributes which are

not related to the products (Sondoh Jr. et al., 2007).

Conclusively, brand image can produce values in terms of assisting consumers to precede

information, generating reasons to purchase, differentiating the brand from the competitors,

provides positive feelings, and offers a basis of extensions. Generating and maintaining a

successful brand image is an important role of a company’s marketing strategy and branding

strategy.

2.2.4 Customer loyalty

According to Oliver (2014), customer’s loyalty is defined as “a deep held commitment to

repurchase or re-partronize a preferred product/service consistently in the future, thereby

causing repetitive same-brand or same brand-set purchasing, despite situational influences and

making efforts that have the potential to cause switching behaviors” (P.34). Customer loyalty

is a strategy that creates mutual rewards to benefit firms and customers (Reichheld & Detrick,

2014). With loyal customers, companies can maximize their profit because loyal customers are

willing to (1) purchase more frequently; (2) spend money on trying new products or services;

(3) recommend products and services to others; and (4) give companies sincere suggestions

(Reichheld & Sasser, 1990). According to Ahmed and Moosavi (2013 “customers loyalty is
the customer’s willingness to stay with a brand when competitors come knocking with offers

that would be considered equally attractive had not the consumer and brand shared a history”.

Rehman, et al., (2010) and Deng, Lu, Wei, Zhang (2010), expressed that same notion.

Furthermore, Reza and Rehman (2012) note that customer loyalty represents the repeat

purchase and referring the company to other customers. They also stated that customer loyalty

is a figure that may be measured directly by measuring the actual repeated sales to customers.

Customer loyalty is the most important goal of implementing relationship-marketing activities.

Oliver (2007) defined customer loyalty as a “deeply held commitment to rebuy or repatronize

a preferred product or service consistently in the future, thereby causing repetitive same-brand

or same brand-set purchasing, despite situational influences and marketing efforts that were

having the potential to cause switching behavior”. Customers are the driving force for a

profitable growth and customer loyalty and this can lead to profitability (Hayes, 2008).

For a customer, loyalty is a positive attitude and behavior related to the level of re-purchasing

commitment to a brand in the future (Chu, 2009). Loyal customers are less likely to switch to

a competitor solely because of price, and they even make more purchases than non-loyal

customers (Reichheld, F. 1996). Loyal customers are also considered to be the most important

assets of a company. It is thus essential for vendors to keep loyal customers who will contribute

long-time profit to the business organizations (Tseng, 2007). Attempts to make existing

customers increase their purchases are some of the ways to strengthen the financial growth of

a company (Hayes, 2008).

According to Keiningham (2008), organization’s financial growth is dependent on a company’s

ability to retain existing customers at a faster rate than it acquires new ones. Therefore, good

managers should understand that the road to growth runs through customers not only in

attracting managers should understand that the road to growth runs through customers not only

in attracting new customers, but also in holding onto existing customers, motivating them to
spend more and getting them to recommend products and service to the other people. Customer

loyalty has been getting them to recommend products and services to the other people.

Customer loyalty has been generally loyalty describes customer’s attitude towards loyalty by

measuring customer preference, buying intention, supplier prioritization and recommendation

willingness. On the other hand, behavioral loyalty relates to shares of purchase, purchasing

frequency (Aydin, 2005). There are evidences suggesting that stronger relationship

commitment leads to buyers’ repeat patronage. Wulf et, al. (2001) defined the construct of

behavioral loyalty as a composite measure based on a consumer’s purchasing frequency and

amount spent at a retailer compared with the amount spent at other retailers from whom the

consumer buys.

Morgan and Hunt (2004) found significant relationship between the level of a buyer’s

relationship commitment and his acquiescence, propensity to leave, and cooperation, all of

which can be regarded as behavioral outcomes of relationships.

2.4 Empirical literature Review.

In terms of the branding benefits to intermediaries such as retailers and wholesalers, a strong

brand with high brand recognition and brand awareness speeds up the stock turnover rate,

lowers the selling cost, and leads to higher sales. Consumers will also be more inclined to

(re)purchase in their stores and spread word of mouth to others. These in turn facilitate the in

store activities related to the selling of the products with the brand. Some empirical evidence

indicated that benefits/value was positively related to loyalty/repurchase intention. Vazquez-

Carrasco and Foxall (2006) in their studies found that relation benefits which consisted of

social, confidence and special treatment benefit have a direct influence on passive loyalty. In

the context of consumer-salesperson relationship, Reynolds and Beatty (1999) discovered that

when customers perceived higher social benefits, they were more loyal with the salesperson.

Tsai (2005) also found that symbolic, affective and trade off value as an indicator of “brand
 purchase value” was positively related to repurchase intention. The above findings were further

enhanced by Bhat and Reddy (1998) who suggested that there was a need to assess the

relationship between brand functionality/prestige/personality expression, and popular

dependent variables such as brand attitudes, purchase intention and purchase behavior.

In this research, the five variables of brand image benefits: experimental, social, symbolic,

functional and appearance enhances are used in this research. The elements used for measuring

social and experiential benefits are adopted from Sweeney and Soutar’s (2001) scales, symbolic

benefits elements are adopted from Tsai (2005), whereas the elements of functional benefits

are taken from Del Rio et al. (2001) and also self-developed one question to match the

definition given by Park et al. (1986). Finally, the appearance enhance second elements is

obtained from Sweeney and Soutar’s (2001) and other two questions are self-developed.

2.4.1 Social benefits

Vodacom in social benefits has played a big role to the society especially in maintaining the

overall direction and control of social responsibility performance (Brown, 2008). The chief

officer of Vodacom in Tanzania responsible for legal and regulatory affairs, ethics and

compliance affirmed that over the past years, corporate social responsibility (CSR) has been a

main focus for academic and business social benefits (SB) is a universal concept, which refers

to international standards, guidelines to operate in an economic, social and environmentally

responsible manner (Vodacom Chief Officer 2010). Since the first definition formulated by the

OECD in 1976 for multinational cellular network companies, this notion has become a major

issue for organizations when considering the impacts of their business strategies on the

relationship with their stakeholders and on society. In 2010 international standard ISO 26000

has defined social benefits (SB) as the ability of Vodacom organization to “identify and accept

responsibility for the impacts of their decisions and activities on society and the environment

through transparent and ethical behavior that contributes to sustainable development.

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