Cultural Difference of Customer Equity Drivers on Customer Loyalty: A Cross-National Comparison between South Korea and United States
Abstract
Purpose: Many advanced discount stores could not reach the certain growth level due to cultural differences and their marketing strategies that have failed to adopt in local market environment. The purpose of this study is to find the effects of customer equity drivers on customer loyalty and to examine cultural differences between South Korea and United States.
Methodology/Approach: This study sets independent variables of value equity, brand equity and relationship equity from the customer equity model and tests to see how each equity driver affects customers' loyalty through gaining their trust and satisfaction in the discount store industry. We applied structural equation model to test the hypothesis. We conducted a survey on customers who had shopping experiences in discount stores and gathered data from United States and South Korea respectively.
Findings: The results show that there are significant differences in the effects of customer drivers on customer loyalty via trust and satisfaction in large retail industries. While Satisfaction had some effects on building their loyalty in Korea, satisfaction had no effect in gaining customers’ loyalty in USA.
Research Limitation/implication: The results of this study are highly relevant for managers who must make strategic marketing decisions for different cultures.
Originality/Value of paper: This study is the first systematic cross-cultural examinations on how customer equity drivers in discount stores affect customer loyalty between USA and South Korea.References
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Atuahene-Gima, K. and Li, H., 2002. When does trust matter? Antecedents and contingent effects of supervisee trust on performance in selling new products in China and the United States. Journal of Marketing, 66(3), pp.61-81.
Bao, Y., Zhou, K.Z. and Su, C., 2003. Face consciousness and risk aversion: do they affect consumer decision‐making?. Psychology and Marketing, 20(8), pp.733-755.
Bond, R. and Smith, P.B., 1996. Culture and conformity: A meta-analysis of studies using Asch's (1952b, 1956) line judgment task. Psychological bulletin, 119(1), pp.111-137.
Brady, M.K., Robertson, C.J. and Cronin, J.J., 2001. Managing behavioral intentions in diverse cultural environments: An investigation of service quality, service value, and satisfaction for American and Ecuadorian fast-food customers. Journal of International Management, 7(2), pp.129-149.
Chin, W.W., 2000. Frequently asked questions–partial least squares and PLS-graph. Available at: < http://disc-nt.cba.uh.edu/chin/plsfaq.htm#Q1 >.
Chung, N. and Kwon, S.J., 2009. Effect of trust level on mobile banking satisfaction: a multi-group analysis of information system success instruments. Behaviour and Information Technology, 28(6), pp.549-562.
De Mooij, M. and Hofstede, G., 2011. Cross-cultural consumer behavior: A review of research findings. Journal of International Consumer Marketing, 23(3-4), pp.181-192.
Delgado-Ballester, E. and Luis Munuera-Alemán, J., 2001. Brand trust in the context of consumer loyalty. European Journal of Marketing, 35(11/12), pp.1238-1258.
Dwivedi, A., Merrilees, B., Miller, D. and Herington, C., 2012. Brand, value and relationship equities and loyalty-intentions in the Australian supermarket industry. Journal of Retailing and Consumer Services, 19(5), pp.526-536.
Eggert, A. and Ulaga, W., 2002. Customer perceived value: a substitute for satisfaction in business markets?. Journal of Business and Industrial Marketing, 17(2/3), pp.107-118.
Erdem, T., Zhao, Y. and Valenzuela, A., 2004. Performance of store brands: A cross-country analysis of consumer store-brand preferences, perceptions, and risk. Journal of Marketing Research, 41(1), pp.86-100.
Flavián, C., Guinalíu, M. and Gurrea, R., 2006. The role played by perceived usability, satisfaction and consumer trust on website loyalty. Information and Management, 43(1), pp.1-14.
Fornell, C. and Larcker, D.F., 1981. Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), pp.39-50.
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Gounaris, S.P. and Venetis, K., 2002. Trust in industrial service relationships: behavioral consequences, antecedents and the moderating effect of the duration of the relationship. Journal of Services Marketing, 16(7), pp.636-655.
Henderson, P.W., Cote, J.A., Leong, S.M. and Schmitt, B., 2003. Building strong brands in Asia: selecting the visual components of image to maximize brand strength. International Journal of Research in Marketing, 20(4), pp.297-313.
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Lee, M. and Ulgado, F.M., 1997. Consumer evaluations of fast-food services: a cross-national comparison. Journal of Services Marketing, 11(1), pp.39-52.
Lemon, K.N., Rust, R.T. and Zeithaml, V.A., 2001. What drives customer equity? Marketing Management, 10(1), pp.20-25.
Liao, J. and Wang, L., 2009. Face as a mediator of the relationship between material value and brand consciousness. Psychology and Marketing, 26(11), pp.987-1101.
Liu, B.S., Furrer, O. and Sudharshan, D., 2001. The relationships between culture and behavioral intentions toward services. Journal of Service Research, 4(2), pp.118-129.
Liu, R.R. and McClure, P., 2001. Recognizing cross-cultural differences in consumer complaint behavior and intentions: an empirical examination. Journal of Consumer Marketing, 18(1), pp.54-75.
Lowe, C-T.A. and Corkindale, D.R., 1998. Differences in “cultural values“ and theireffects on responses to marketing stimuli: A cross-cultural study between Australians and Chinese from the People's Republic of China. European Journal of Marketing, 32(9/10), pp.843-867.
Mittal, V. and Kamakura, W.A., 2001. Satisfaction, repurchase intent, and repurchase behavior: Investigating the moderating effect of customer characteristics. Journal of Marketing Research, 38(1), pp.131-142.
Nunnally, J.C., 1978. Psychometric theory. New York, NY: McGraw-Hill.
Park, C.-H. and Kim, Y.-G., 2003. Identifying key factors affecting consumer purchase behavior in an online shopping context. International Journal of Retail and Distribution Management, 31(1), pp.16-29.
Quester, P. and Lin Lim, A., 2003. Product involvement/brand loyalty: is there a link?. Journal of product and brand management, 12(1), pp.22-38.
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Reichheld, F.F. and Schefter, P., 2000. E-loyalty: your secret weapon on the web. Harvard business review, 78(4), pp.105.
Richards, K.A. and Jones, E., 2008. Customer relationship management: Finding value drivers. Industrial Marketing Management, 37(2), pp.120-130.
Rust, R.T., Lemon, K.N. and Zeithaml, V.A., 2004. Return on marketing: Using customer equity to focus marketing strategy. Journal of Marketing, 68(1), pp.109-127.
Shapiro, B.P., 1973. Price reliance: existence and sources. Journal of Marketing Research, 10(3), pp.286-294.
Singh, J. and Sirdeshmukh, D., 2000. Agency and trust mechanisms in consumer satisfaction and loyalty judgments. Journal of the Academy of Marketing Science, 28(1), pp.150-167.
Sirohi, N., McLaughlin, E.W. and Wittink, D.R., 1998. A model of consumer perceptions and store loyalty intentions for a supermarket retailer. Journal of Retailing, 74(2), pp.223-245.
Szymanski, D.M. and Henard, D.H., 2001. Customer Satisfaction: A Meta-Analysis of the Empirical Evidence. Journal of the Academy of Marketing Science, 29(1). pp.16-35.
Ting-Toomey, S. and Kurogi, A., 1998. Facework competence in intercultural conflict: An updated face-negotiation theory. International Journal of Intercultural Relations, 22(2), pp.187-225.
Verhoef, P.C., Langerak, F. and Donkers, B., 2007. Understanding brand and dealer retention in the new car market: The moderating role of brand tier. Journal of Retailing, 83(1), pp.97-113.
Vogel, V., Evanschitzky, H. and Ramaseshan, B., 2008. Customer Equity Drivers and Future Sales. Journal of Marketing, 72(6), pp.98-108.
Yamagishi, T. and Yamagishi, M., 1994. Trust and commitment in the United States and Japan. Motivation and Emotion, 18(2), pp.129-166.
Yang, Z. and Peterson, R.T., 2004. Customer perceived value, satisfaction, and loyalty: The role of switching costs. Psychology and Marketing, 21(10), pp.799-822.
Zeithaml, V.A., 1988. Consumer perceptions of price, quality, and value: a means-end model and synthesis of evidence. The Journal of marketing, 52(3), pp.2-22.
Zeithaml, V.A., Berry, L.L. and Parasuraman, A., 1996. The behavioral consequences of service quality. The Journal of marketing, 52(3), p.31-46.
Zhang, S.S., Van Doorn, J. and Leeflang, P.S., 2014. Does the importance of value, brand and relationship equity for customer loyalty differ between Eastern and Western cultures?. International Business Review, 23(1), pp.284-292.
Anderson, E.W., Fornell, C. and Lehmann, D.R., 1994. Customer satisfaction, market share, and profitability: Findings from Sweden. The Journal of marketing, 58(3), pp.53-66.
Atuahene-Gima, K. and Li, H., 2002. When does trust matter? Antecedents and contingent effects of supervisee trust on performance in selling new products in China and the United States. Journal of Marketing, 66(3), pp.61-81.
Bao, Y., Zhou, K.Z. and Su, C., 2003. Face consciousness and risk aversion: do they affect consumer decision‐making?. Psychology and Marketing, 20(8), pp.733-755.
Bond, R. and Smith, P.B., 1996. Culture and conformity: A meta-analysis of studies using Asch's (1952b, 1956) line judgment task. Psychological bulletin, 119(1), pp.111-137.
Brady, M.K., Robertson, C.J. and Cronin, J.J., 2001. Managing behavioral intentions in diverse cultural environments: An investigation of service quality, service value, and satisfaction for American and Ecuadorian fast-food customers. Journal of International Management, 7(2), pp.129-149.
Chin, W.W., 2000. Frequently asked questions–partial least squares and PLS-graph. Available at: < http://disc-nt.cba.uh.edu/chin/plsfaq.htm#Q1 >.
Chung, N. and Kwon, S.J., 2009. Effect of trust level on mobile banking satisfaction: a multi-group analysis of information system success instruments. Behaviour and Information Technology, 28(6), pp.549-562.
De Mooij, M. and Hofstede, G., 2011. Cross-cultural consumer behavior: A review of research findings. Journal of International Consumer Marketing, 23(3-4), pp.181-192.
Delgado-Ballester, E. and Luis Munuera-Alemán, J., 2001. Brand trust in the context of consumer loyalty. European Journal of Marketing, 35(11/12), pp.1238-1258.
Dwivedi, A., Merrilees, B., Miller, D. and Herington, C., 2012. Brand, value and relationship equities and loyalty-intentions in the Australian supermarket industry. Journal of Retailing and Consumer Services, 19(5), pp.526-536.
Eggert, A. and Ulaga, W., 2002. Customer perceived value: a substitute for satisfaction in business markets?. Journal of Business and Industrial Marketing, 17(2/3), pp.107-118.
Erdem, T., Zhao, Y. and Valenzuela, A., 2004. Performance of store brands: A cross-country analysis of consumer store-brand preferences, perceptions, and risk. Journal of Marketing Research, 41(1), pp.86-100.
Flavián, C., Guinalíu, M. and Gurrea, R., 2006. The role played by perceived usability, satisfaction and consumer trust on website loyalty. Information and Management, 43(1), pp.1-14.
Fornell, C. and Larcker, D.F., 1981. Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), pp.39-50.
Fukuyama, F., 1995. Trust: The social virtues and the creation of prosperity. New York, NY: Free Press.
Galston, W.A., 1996. Trust--But quantify--Trust: The Social Virtues and the Creation of Prosperity by Francis Fukuyama. Public Interest, 122, pp.129-132.
Gefen, D., Straub, D. and Boudreau, M.C., 2000. Structural equation modeling and regression: Guidelines for research practice. Communications of the association for information systems, 4(1), pp.2-77.
Gounaris, S.P. and Venetis, K., 2002. Trust in industrial service relationships: behavioral consequences, antecedents and the moderating effect of the duration of the relationship. Journal of Services Marketing, 16(7), pp.636-655.
Henderson, P.W., Cote, J.A., Leong, S.M. and Schmitt, B., 2003. Building strong brands in Asia: selecting the visual components of image to maximize brand strength. International Journal of Research in Marketing, 20(4), pp.297-313.
Hennig-Thurau, T., Gwinner, K.P. and Gremler, D.D., 2002. Understanding relationship marketing outcomes an integration of relational benefits and relationship quality. Journal of Service Research, 4(3), pp.230-247.
Hofstede, G.H. and Hofstede, G., 2001. Culture's consequences: Comparing values, behaviors, institutions and organizations across nations. Thousand Oaks, CA: Sage Publications.
Homburg, C. and Giering, A., 2001. Personal characteristics as moderators of the relationship between customer satisfaction and loyalty - an empirical analysis. Psychology and Marketing, 18(1), pp.43-66.
Jöreskog, K.G. and Sörbom, D., 1989. LISREL 7: A guide to the program and applications. IL, Chicago: SPSS.
Jin, B., Yong Park, J. and Kim, J., 2008. Cross-cultural examination of the relationships among firm reputation, e-satisfaction, e-trust, and e-loyalty. International Marketing Review, 25(3), pp.324-337.
Jones, T.O., 1996. Why satisfied customers defect. Journal of Management in Engineering, 12(6), pp.11.
Kale, S.H. and Barnes, J.W., 1992. Understanding the domain of cross-national buyer-seller interactions. Journal of International Business studies, 23(1), pp.101-132.
Lau, G.T. and Lee, S.H., 1999. Consumers' trust in a brand and the link to brand loyalty. Journal of Market-Focused Management, 4(4), pp.341-370.
Lee, M. and Ulgado, F.M., 1997. Consumer evaluations of fast-food services: a cross-national comparison. Journal of Services Marketing, 11(1), pp.39-52.
Lemon, K.N., Rust, R.T. and Zeithaml, V.A., 2001. What drives customer equity? Marketing Management, 10(1), pp.20-25.
Liao, J. and Wang, L., 2009. Face as a mediator of the relationship between material value and brand consciousness. Psychology and Marketing, 26(11), pp.987-1101.
Liu, B.S., Furrer, O. and Sudharshan, D., 2001. The relationships between culture and behavioral intentions toward services. Journal of Service Research, 4(2), pp.118-129.
Liu, R.R. and McClure, P., 2001. Recognizing cross-cultural differences in consumer complaint behavior and intentions: an empirical examination. Journal of Consumer Marketing, 18(1), pp.54-75.
Lowe, C-T.A. and Corkindale, D.R., 1998. Differences in “cultural values“ and theireffects on responses to marketing stimuli: A cross-cultural study between Australians and Chinese from the People's Republic of China. European Journal of Marketing, 32(9/10), pp.843-867.
Mittal, V. and Kamakura, W.A., 2001. Satisfaction, repurchase intent, and repurchase behavior: Investigating the moderating effect of customer characteristics. Journal of Marketing Research, 38(1), pp.131-142.
Nunnally, J.C., 1978. Psychometric theory. New York, NY: McGraw-Hill.
Park, C.-H. and Kim, Y.-G., 2003. Identifying key factors affecting consumer purchase behavior in an online shopping context. International Journal of Retail and Distribution Management, 31(1), pp.16-29.
Quester, P. and Lin Lim, A., 2003. Product involvement/brand loyalty: is there a link?. Journal of product and brand management, 12(1), pp.22-38.
Ramaseshan, B., Rabbanee, F.K. and Tan Hsin Hui, L., 2013. Effects of customer equity drivers on customer loyalty in B2B context. Journal of Business and Industrial Marketing, 28(4), pp.335-346.
Reichheld, F.F. and Schefter, P., 2000. E-loyalty: your secret weapon on the web. Harvard business review, 78(4), pp.105.
Richards, K.A. and Jones, E., 2008. Customer relationship management: Finding value drivers. Industrial Marketing Management, 37(2), pp.120-130.
Rust, R.T., Lemon, K.N. and Zeithaml, V.A., 2004. Return on marketing: Using customer equity to focus marketing strategy. Journal of Marketing, 68(1), pp.109-127.
Shapiro, B.P., 1973. Price reliance: existence and sources. Journal of Marketing Research, 10(3), pp.286-294.
Singh, J. and Sirdeshmukh, D., 2000. Agency and trust mechanisms in consumer satisfaction and loyalty judgments. Journal of the Academy of Marketing Science, 28(1), pp.150-167.
Sirohi, N., McLaughlin, E.W. and Wittink, D.R., 1998. A model of consumer perceptions and store loyalty intentions for a supermarket retailer. Journal of Retailing, 74(2), pp.223-245.
Szymanski, D.M. and Henard, D.H., 2001. Customer Satisfaction: A Meta-Analysis of the Empirical Evidence. Journal of the Academy of Marketing Science, 29(1). pp.16-35.
Ting-Toomey, S. and Kurogi, A., 1998. Facework competence in intercultural conflict: An updated face-negotiation theory. International Journal of Intercultural Relations, 22(2), pp.187-225.
Verhoef, P.C., Langerak, F. and Donkers, B., 2007. Understanding brand and dealer retention in the new car market: The moderating role of brand tier. Journal of Retailing, 83(1), pp.97-113.
Vogel, V., Evanschitzky, H. and Ramaseshan, B., 2008. Customer Equity Drivers and Future Sales. Journal of Marketing, 72(6), pp.98-108.
Yamagishi, T. and Yamagishi, M., 1994. Trust and commitment in the United States and Japan. Motivation and Emotion, 18(2), pp.129-166.
Yang, Z. and Peterson, R.T., 2004. Customer perceived value, satisfaction, and loyalty: The role of switching costs. Psychology and Marketing, 21(10), pp.799-822.
Zeithaml, V.A., 1988. Consumer perceptions of price, quality, and value: a means-end model and synthesis of evidence. The Journal of marketing, 52(3), pp.2-22.
Zeithaml, V.A., Berry, L.L. and Parasuraman, A., 1996. The behavioral consequences of service quality. The Journal of marketing, 52(3), p.31-46.
Zhang, S.S., Van Doorn, J. and Leeflang, P.S., 2014. Does the importance of value, brand and relationship equity for customer loyalty differ between Eastern and Western cultures?. International Business Review, 23(1), pp.284-292.
Authors
Cho, I., & Jang, Y. S. (2017). Cultural Difference of Customer Equity Drivers on Customer Loyalty: A Cross-National Comparison between South Korea and United States. Quality Innovation Prosperity, 21(2), 01–19. https://doi.org/10.12776/qip.v21i2.881
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