Study on the influencing factors of customer brand loyalty in hospitality industry: Case study of Sheraton Hotel (Research Paper).


Study on the influencing factors of customer brand loyalty in hospitality industry: Case study of Sheraton Hotel (Research Paper).

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1. Introduction

1.1 Research background

As a result of economic growth and increased disposable average personal income, an increasing number of people are travelling to distant scenic spots and places (Suhartanto, Michael and David, 2013). The hospitality industry, as one of the rapidly growing sections in the tourism industry, plays a vital role in the tourism market. By supporting infrastructure improvement, creating job opportunities and enhancing cultural understanding, the hospitality industry has flourished (Bohdanowicz and Zientara, 2009). Facing an extremely intense business environment, companies in the hospitality industry have higher customer expectations to survive the competitive environment and gain profits (Han, Wansoo and Sunghyup, 2011). However, numerous hospitality enterprises failed to increase market share due to stiffer international competition, mature markets, decreasing population growth and other reasons (So et al., 2013).

To gain competitive advantage, hospitality companies pay more attention to searching for and retaining customers, as loyal customers tend to pay more for their preferred brands and products in addition to recommending the brand to other customers (Harris and Goode, 2004). However, customers easily switch to other hospitality companies as the switching cost is low. There are numerous choices for similar products, and mobile devices and broadband make it easy to access these choices. Therefore, companies are forced to risk reducing profits by lowering prices. In this situation, it becomes more important to increase customer loyalty to retain long-term relationships with them and fully satisfy their demands (Han and Back, 2008). In order to find ways to produce distinctive products or services for customers in the competitive hospitality industry, companies tend to make use of branding strategies to gain differentiation and competitive advantage (Choi and Raymond, 2001).

For hospitality companies, an effective branding strategy enhances the financial performance, market value and other key performance indicators including revenue, occupancy, return on investment and average price of companies (Kim and Woo, 2005). Researchers O’Neill and Carlback (2011) also believe that brand-name hotels can gain higher profits even in economic recessions. On their part, consumers prefer to select brand-name hotels with quality assurance to reduce costs in searching, possible losses in selection failures, and perceived risks (Prasad and Dev, 2000).

Customer loyalty can be developed when customers receive products or services that satisfy their needs, thus producing psychological reliance and behavioural pursuit (Mason, Tideswell and Roberts, 2006). Customer brand loyalty is seen as an indicator of the successful use of brand strategy. It has become the ultimate objective of organisations to develop and maintain customer brand loyalty through marketing activities (Ahearne, Bhattacharya and Gruen, 2005). Customer brand loyalty can reflect the possibility that a customer switches to other brands, especially when the product makes some changes in price or features. With the increase of the loyalty degree on enterprise products, the influence of competitor behaviour on the customers will be reduced. Therefore, customer brand loyalty can indicate customers’ future loyal behaviours as well as the enterprise’s future profits (He et al., 2012).

Sheraton Hotel, established in 1963, manages over 400 franchises around 72 countries with a leading position in global hospitality market as a well-known brand for global consumers. As an international luxury hotel, Sheraton Hotel has attempted to maintain its brand image of high quality. Sheraton Hotel is found in some of the most attractive and prosperous cities and vocational villages, and provides high quality services to customers from around the world. Therefore, this research studies the influencing factors of customer brand loyalty in the hospitality industry through the case study of Sheraton Hotel to help enterprises’ performance remain favourable in the competitive hospitality industry.

1.2 Research rationale

The research rationale can be illustrated from both practical and theoretical perspectives. From a practical perspective, many hospitality enterprises today have failed to increase their market share due to stiffer international competition, mature markets, decreasing population growth and other reasons, resulting in an extremely intense business environment and high customer expectations that enterprises must meet to survive the competitive environment and gain profits (Suhartanto, Michael and David, 2013). Hotel enterprises have made efforts to attract repeat customers by offering reward schemes, tracking customers’ likes and dislikes or providing special promotions for repeat customers (Mason, Tideswell and Roberts, 2006). In this context, customers become the most precious resources for companies, and therefore customer loyalty can affect enterprises’ profits (Kandampully and Suhartanto, 2000). As customer brand loyalty can help enterprises gain more profitability, it is of great practical significance to identify the factors influencing customer brand loyalty in the hospitality industry, which is the rapidest growing section of the tourism market (Cheung, Kong and Song, 2014).

From a theoretical perspective, brand loyalty has been studied in many researches extensively; with most of the existing researches focused on examining some important marketing concepts, including perceived value by Ryu, Han and Kim (2008) Chen and Hu (2010) and Yang and Peterson (2004), brand trust by Han and Jeong (2013), and service quality by Hu, Kandampully and Juwaheer (2009). These are viewed as antecedents of customer brand loyalty. These researches mainly sought for findings to understand customer brand loyalty from the perspective of customers and made significant progress; however, only a few researchers analysed the influencing factors of customer brand loyalty development from the perspective of social identity (He et al., 2012). In order to understand customer brand relationship from a more comprehensive perspective, it is of great significance to analyse the impact of customer brand identification, which is originated from the social identity theory, on customer brand loyalty. It is believed that customer brand identification can lead to various customer outcomes (He et al., 2012). Researchers also believed that customer brand identification can help companies understand brand management and make customers produce favourable evaluation on the brand (Ahearne, Bhattacharya and Gruen, 2005). Several previous researches have studied the impact of customer brand identification on customer brand loyalty and reached conflicting results. Besides, existing relevant researches have studied products or services in industries such as cosmetics as studied by Papista and Dimitriadis (2012), cars as studied by Kuenzel and Halliday (2008), and sports as studied by Carlson, Donavan and Cumiskey (2009); however, the results reached may not adapt to hospitality industry. Researchers suggested that customers develop a certain level of identification in the hospitality service process, and branding strategies have been extensively adopted in hospitality industry (Cheung, Kong and Song, 2014). Therefore, it is of great significance for this research to analyse the impact of customer brand identification as well as service quality, perceived value and brand trust on customer brand loyalty.

1.3 Research aim and objectives

This research aims to explore the influencing factors of customer brand loyalty in the hospitality industry based on the study on Sheraton Hotel. The specific research objectives are as follows:

To explore the impact of customer brand identification on customer brand loyalty in Sheraton Hotel;

To explore the impact of service quality on customer brand loyalty in Sheraton Hotel;

To explore the impact of perceived value on customer brand loyalty in Sheraton Hotel;

To explore the impact of brand trust on customer brand loyalty in Sheraton Hotel;

To provide recommendations for Sheraton Hotel to improve customer brand loyalty

1.4 Research structure

The research is divided into five chapters. Chapter one is the introduction, in which the researcher illustrates the research background, practical and theoretical research rational, and research objectives of the research. Chapter two is the literature review, in which the researcher reviews existing researches on the influencing factors of customer brand loyalty in the hospitality industry. Chapter three is the research methodology, in which the researcher critically analyses the research approaches and strategies, research instruments as well as data collection process. Chapter four is the data analysis and findings, in which the researcher analyses the data collected to arrive at research results by comparing with existing literature. Chapter five is the conclusions and recommendations, in which the researcher presents the conclusions based on the research objectives, and proposes recommendations for future researches.

2. Literature Review

This section contains an evaluation of literal works examining customer loyalty and its contributory factors, particularly brand identification, service quality, perceived value and brand trust. The review includes evaluations of academic journals and books, as well as other relevant sources of information that offer insight into this topic area. The viewpoints of various researchers have been highlighted in an effort to draw logical conclusions on the factors influencing brand loyalty. The literature review is divided into five sections: Customer brand loyalty, the impact of brand identification on customer brand loyalty, the impact of service quality on customer brand loyalty, the impact of perceived value on customer brand loyalty and the impact of brand trust on customer brand loyalty.

2.1 Customer brand loyalty

Customer loyalty is a combination of the emotional commitment a customer feels toward a particular business, the resulting intentional purchasing tendency and will, as well as repeated preferences (Bilgili et al., 2014). The number of loyal customers that a business has significantly affects its long term success and profitability, which is why creating and maintaining customer loyalty is important for any company. Creating loyal and satisfied customers is done by creating value for them (Dube and Renaghan, 2001).

The growing power of customers causes them to be more demanding and less loyal, making it difficult for service providers to build and maintain loyalty among the customers they already have. However, based on lifetime customer value analysis, retaining a customer costs less than it does to acquire a new one (Linton, 2012).

Customer loyalty is not only important for franchise hotels, but also in the context of hospitality micro-enterprises (HMEs). In the absence of franchise, customer loyalty becomes even more important as a factor for survival. A study by Mostajer et al. (2014) explored the importance of customer loyalty to owner-managers and their role in generating the antecedents of loyalty. It was found that owner-managers were motivated to create an ‘at home’ feeling and offer extra services to their customers. However, in contrast to franchise hotels, HMEs were found to be unable to build customer loyalty at its higher levels. This shows that franchise hotels such as Sheraton hold the advantage in terms of building high levels of customer loyalty.

2.2 Impact of brand identification on customer brand loyalty

Bhattacharya and Sen (2003) introduced the concept of consumer-company identification, which refers to the development of strong and committed relationships between consumers and companies. Originally, identification was viewed as a psychological state that reflected the bond that existed between individuals and their organizations, providing explanations for employee attitudes and behaviours (Edwards, 2005). A positive attitude towards a brand is likely to form when self-image matches with brand image (Lantos, 2011).

Bhattacharya and Sen (2003) transferred the social identity theory into the consumer domain, extending the concept of identification to consumer-company relationships and arguing that people can identify with companies despite the fact that no formal membership existed. Later, the identification construct was extended to the branding context, with consumer brand identification referring to a customer’s sense of sameness with a particular brand (Tuskej et al., 2011).

Brand identification is an area that has almost been completely neglected by marketing researchers (Kuenzel and Halliday, 2010). Identification based on social identity has largely been examined in the sociological and psychological disciplines and more recently in organization behaviour and human resource management. Kuenzel and Halliday (2010) cite Ashforth and Mael (1989) who present the social identity theory, which stipulates that people articulate their sense of self, going beyond their personal identity to develop a social identity. Their research confirmed that consumers’ development of relationships via brand identification results in word of mouth about the brand and repurchase intentions. Applying this to the marketing context, consumers develop social identity by associating themselves with brands reflecting and reinforcing their personal identities (Bhattacharya and Sen, 2003).Having examined the extensive literature focusing on the role of material possessions impacting identity formation, they observed that the identification of consumers with companies also contributes to their self-extension. They go further to opine that encouraging identification is not only a good employee-retention strategy, but a good customer-retention one as well. As such, the social identity theory perspective affirms the existence of a positive relationship between brand identification and customer loyalty.

In agreement with the view from the social identity perspective, a number of studies also indicate a positive but indirect relationship between brand identification and brand loyalty, with different constructs mediating the relationship. A study was carried out by Shirazi et al. (2013) in which they sought to investigate the effect that brand identity and brand identification had on brand loyalty through customer satisfaction, perceived value, and trust among cellphone customers in Iran. The results revealed that brand identification and brand identity both have an indirect effect on brand loyalty through perceived value, trust and satisfaction. In addition, brand identity and brand identification were found to have a positive association. Drawing from these results, the researchers opined that the social identity perspective could be used in conjunction with other perspectives to predict brand loyalty mechanisms.

Another study focusing on the hospitality industry by So et al. (2013) found closely related results. It established that customer brand identification is an indirect predictor of hotel brand loyalty. The results suggested that although customers may identify with particular hotel brands, hotel loyalty is still dependent on the positive evaluation by customers of the factors that relate to service experiences. As such, the researchers observed that hoteliers can leverage customers’ brand identification to engender positive consumer evaluation of the hotel brand, which in turn will increase customer loyalty. The preceding studies establish the fact that an indirect relationship exists between brand identification and brand loyalty, with different mediating factors such as perceived value, trust, satisfaction and service quality linking the two.

While the relationship between brand identification and brand loyalty has been established by many researchers, few have examined the strength of this relationship. A study by Haumann et al. (2013) sought to offer a comparative analysis of the effectiveness of customer satisfaction and customer-company identification in driving important customer outcomes over an extended period. The analyses showed that customer satisfaction and customer-company identification both had positive initial effects on customer loyalty and willingness to pay, but the long-term effects of these two factors differed. The positive effects of customer satisfaction were found to decrease rapidly in comparison to the effects of customer-company identification, which were significantly more persistent. Further, the findings from the study suggested that customer-company identification is more effective in terms of immunizing customers against the actions of competing companies. A study with similar findings concluded that relative customer-brand identifications as well as relative perceived value of a new brand inhibit switching behaviour (Lam et al., 2010).  In fact, relative customer brand identification was found to exert greater restraint on switching behaviour in comparison to the relative perceived value of the new product. These findings confirm that brand identification plays a crucial role in encouraging brand loyalty and preventing the loss of customers to competing brands, and is therefore a crucial asset for companies.

Contrastingly, various studies demonstrate that rather than brand identification being a causal factor to brand loyalty, it only acts as a mediator for other factors affecting brand loyalty. A study by Kuenzel and Halliday (2010) showed that brand identification directly affects brand loyalty, but only as mediator of the influences of brand personality congruence and reputation, which both have a direct effect on brand loyalty. They found that brand personality congruence and reputation affect brand identification, which in turn has an impact on brand loyalty. These findings are in agreement with those of a survey conducted by He an Li (2011) to examine the mediation effect of brand identification as well as the moderating effect of SQ (service quality) on the effects of CSR (corporate social responsibility) association on brand performance among customers of mobile telecommunications services. It was determined that both SQ and CSR directly affect brand identification and customer satisfaction, which in turn affect service brand loyalty. These studies demonstrate that although, brand identification leads to brand loyalty, identification itself is the result of other factors with more significant effects on brand loyalty.

The findings from the above studies linking brand identification and brand loyalty reveal the need to look into the relationship between brand identification and brand loyalty to determine whether attention should be given to brand identification on its own, or whether greater focus should be given to stronger causal factors of brand loyalty, with brand identification playing a mediating role as opposed to a causal one.

2.3 Impact of service quality on customer brand loyalty

Lewis and Boom (1983) as cited by Zeithaml and Parasuraman (2004) refer to service quality as the measure of how well customer expectations are matched by the service level delivered. The SERVQUAL model was developed by American authors Zeithaml, Parasuraman and Berry (1990) to denote the main components of high quality service. There were ten components initially, but these were later reduced to five: reliability, assurance, tangibles, empathy and responsiveness. Service quality has to do with the extent to which there is discrepancy between what a customer expects or desires against his or her perceptions (Zeithaml et al., 1990). As such, in order for a service to be considered to be of high quality, it must conform to the expectations of the customer.

In the hospitality industry, service quality is an inherent characteristic that significantly contributes to the industry’s overall growth. Salver (2009) argues that since hotel services differ from physical goods in many ways, the approaches to building and managing brands cannot simply be transferred from physical product brands to service brands. He goes further to suggest that the creation of loyalty in the hotel industry is a complex task that demands attention to and knowledge concerning the different steps involved, as well as the cause-and-effect chain of loyalty. For instance, O’Fallon and Rutherford (2011) suggest that customer satisfaction and loyalty are significantly influenced by customer emotions. The authors suggest that customer attitudes are particularly useful in predicting their behavior, which is why changing or strengthening the basis of such attitudes through service quality could be an effective way of triggering desired customer behavior in the hotel industry. Such findings emphasize the significant variation between customer loyalty to physical products and that to hotel and service brands, with significant important placed on service quality for hotel and service brand strategies.

Various studies establish a positive relationship between service quality and brand loyalty. An example is the study by Bilgili et al. (2014) that sought to determine the effects of perception of quality and image resulting from relational benefit on customer loyalty. Data collected from 400 customers paying for services from 3-star, 4-star and 5-star hotels in Turkey Istanbul indicated that service quality and perceived image of hotel services were found to have an important impact on customer loyalty. In fact, while the values of these two factors were found to be almost equal, the value of perceived service quality was found to be slightly greater. Similarly, a study by Vijayvargy (2014) found that service quality directly affects customer loyalty. Based on the SERVQUAL model, tangibles, convenience and empathy were the most significant dimensions of service quality that influenced the decision of youthful customers in Jaipur India to revisit a chain restaurant establishment, confirming the direct relationship between service quality and customer loyalty. An examination of the impact of waiting time and service quality on customer satisfaction and repurchase frequency found that waiting time as well as other quality factors including seat availability, food quality, staff attitude and the environment significantly influenced the customer’s return frequency (Law et al., 2004). In addition, the same quality factors also had a significant effect on customer satisfaction.

Findings from several studies contradict those of the aforementioned. Instead, they demonstrate that the relationship between service quality and customer loyalty is indirect, with customer satisfaction as the mediating factor. In these studies, quality service results in heightened customer satisfaction, which in turn increases customer loyalty. Radzi et al. (2014), state that the attributes associated with customer loyalty can only be achieved after the customer’s experience, thus triggering loyalty. They go further to suggest that as the customer gains more experience over time, the cumulative satisfaction contributes more to loyalty, so that one unsatisfying experience increases the likelihood of defection. The findings in an investigation by Akbar and Parvez (2009) are in agreement with these opinions. Their study demonstrated that customer satisfaction mediates perceived service quality dimensions and customer loyalty. They stated that the interaction between service quality and customer satisfaction would better explain the variance in customer loyalty as opposed to the direct influence of either service quality or satisfaction alone. In these studies, the researchers found that customer loyalty could only be examined as being the result of both customer satisfaction and service quality, as opposed to examining them as separate causes of customer loyalty.

In contrast, some research in the hotel industry has found no relationship between customer satisfaction and loyalty. In his study on hotels, Jones et al. (2007) looked at the antecedents and consequences of relationship quality in the hotel service environment in an effort to shed new light on the factors that hotels have to deal with to gain satisfied and loyal customers. It was determined that tangible and intangible factors including perceived value, timeliness and hotel facilities were antecedents of hotel quality. Subsequently, hotel quality was a determinant of both customer satisfaction and loyalty, but customer satisfaction was not found to guarantee customer loyalty.

Other authors suggest that customer satisfaction, rather than being a mediating factor in the relationship between service quality and brand loyalty, represents an antecedent of service quality, not a consequence of it. This is based on the argument that a satisfactory experience may affect a customer’s attitude as well as his or her assessment of perceived service quality. As such, satisfaction in a particular transaction could result in a positive general assessment of service quality. A study by Wu et al. (2014) found that in the food and beverage industry in Taiwan, customers’ perceived service quality significantly affected their level of satisfaction. The findings of these studies suggest that customer satisfaction leads to service quality rather than service quality leading to customer satisfaction.

The findings from these studies reveal contrasts in terms of whether customer satisfaction or service quality has the greater impact on customer loyalty. In addition, the strength of the relationships between the three phenomena – customer loyalty, service quality and customer satisfaction, needs to be investigated further to compare the impact of each on the other.

2.4 Impact of perceived value on customer brand loyalty

According to Morar (2013), the construct of consumer perceived value has been identified as one of the most important measures for gaining a competitive edge and is perceived as the basis for all marketing activities. Perceived value is founded on the customer’s experience and is viewed as the compromise between benefits and sacrifices (Zeithaml, 1988). According to Ivanov (2014), expected value is the value that a customer thinks he or she will receive during or after consuming a product, while perceived value is the actual value the customer obtains. Hotels need to ensure that the things that create the most perceived value to their customers are done very well, while simultaneously finding ways to keep costs low (Sturman et al., 2011).

Perceived value is often associated with customer satisfaction, which leads to customer loyalty and retention and ultimately results in higher market share (Morar, 2013). According to Kainth and Verma (2013), consumer perceived value has implications for customers’ repurchase intention by way of brand loyalty with consumer satisfaction as an intermediary. Various studies establish the relationship between perceived value and brand loyalty with customer satisfaction as an intermediary. For instance, Yan et al. (2014) analyzed data from a survey conducted with Mainland Chinese outbound tourists. They examined the effects of travellers’ perceptions of quality value, price value, emotional value and experiential value on their satisfaction and loyalty towards destinations. From the results, it was determined that both emotional value and quality value had significant positive influences on the satisfaction and loyalty of travellers in an outbound tourism setting, with emotional value having the greatest effect. Experiential value had a significant impact on the loyalty of travellers. As such, it was observed that by seeking to add value to services, tourism managers improve their travellers’ satisfaction and loyalty. A study with similar results was carried out by Heung and Ngai (2008), who analyzed the mediating effects of perceived value and customer satisfaction between value-related benefits and customer loyalty. 610 Chinese restaurant diners were interviewed, with findings indicating that perceived value and customer satisfaction exerted mediating effects in the relationship between value-related benefits and customer loyalty. These findings emphasize the importance of customer satisfaction as a critical factor in the relationship between perceived value and customer brand loyalty.

Other studies have established a more direct relationship between perceived value and customer loyalty. Dolarslan (2014) performed a study to determine the relative effects of perceived value and customer satisfaction on customer loyalty behaviour. The secondary aim of the study was to find out whether personal characteristics, including, age, gender and level of income and education exerted any moderating influence over perceived value or customer satisfaction, in turn affecting loyalty behaviours. It was found that both perceived value and customer satisfaction have a direct influence on customers’ loyalty behaviours, with customer satisfaction being a greater predictor than perceived service value. However, perceived service value had a greater effect on customers’ willingness to pay more (Dolarslan, 2014). The link between perceived value, customer satisfaction and customer loyalty was also found to differ depending on the customer’s condition. For instance, perceived value had a greater effect on customer loyalty among older passengers with higher income and more education On the other hand, customer satisfaction had a greater effect on loyalty among females, youth, and customers with lower incomes and education. These findings from this study demonstrate that perceived value has a positive effect on customer loyalty. However, it creates doubt as to whether such effects can be applied to all customers, since different effects were observed on customers with different characteristics.

Similarly, other researchers have also shown that the relationship between perceived value and brand loyalty varies depending on the individual. A study by Thompson et al. (2014) examined how the relationship between brand loyalty and its antecedents is moderated by the differing individual collectivist values of consumers. The researchers developed and tested the theory that consumers’ differences in collectivist values affected the relationship between perceived value, perceived quality, brand trust, and brand loyalty. This was based on previous findings that showed consumers high in individual level collectivist value make different brand choices in comparison to consumers who were low in individual level collectivist values. The results showed that consumers with high individual level collectivist values were significantly more loyal to a brand, particularly when brand trust and perceived quality were relatively low. As such, it may be argued that the relationship between perceived value and brand loyalty could be positive or negative depending on the individual.

Customer loyalty has further been established in various researches as a consequence of perceived value. A meta-analysis of 196 empirical studies with usable test statistics was performed to examine the antecedents and consequences of perceived value (Vieira, 2013). The results confirmed that the antecedents of perceived value include quality, trust, consumer expectations and image, while the consequences of perceived value are loyalty, satisfaction, word-of-mouth, commitment and behavioural intention, further emphasizing the fact that a high perceived value leads to loyalty. Similarly, a study on coffee outlet marketers and operators in Australia investigated how relational benefits enhance perceived value in an effort to gain customer loyalty (Chen and Hu, 2010). A self-administered questionnaire survey was distributed to 949 respondents from coffee outlets. The findings show that relational benefits have a direct effect on perceived value and customer loyalty. Further, relational benefits were found to have an indirect effect on loyalty perceived value, and perceived value had a positive influence on customer loyalty. As such, it was suggested that coffee outlet operators that understood their customers’ perceptions could develop strategies that would differentiate them from competitors and win customer loyalty regardless of the aggressive market. The findings from the above studies imply that perceived value may be used in brand management to influence and encourage customer brand loyalty.

The findings from the studies above are indicative of two major views about the relationship between perceived value and customer brand loyalty. The first is that of a positive relationship between the two, and the second is that of the relationship between perceived value and customer brand loyalty being influenced by an individual’s characteristics. As such, more extensive research should be conducted to determine whether perceived value can indeed be considered an antecedent to customer loyalty without the influence of an individual’s characteristics.

2.5. Impact of brand trust on customer brand loyalty

Brand trust can be defined as the average consumer’s willingness to rely on a brand’s ability to perform a stipulated function (Chaudhuri and Holbrook, 2001). Shefter and Reichheld (2000) observe that trust must be gained before customer loyalty is possible. Bibb and Kourdi (2004) agree with this premise, stating that building and maintaining customer loyalty is impossible if customers do not trust the brand and its products. Some of the benefits that trust creates for the customers include reduced risk as well as an increased level of certainty in their relationship with their service provider, which consequently assists in developing customer commitment (Garbarino and Jonhson, 1999). As such, hotel staff and managers must ensure that they are completely clear and honest about what they offer their customers to enhance brand trust and avoid creating high expectations that do not match reality (Sigala et al., 2012).

The importance of brand trust to a business has been discussed by various authors. For instance, Soman and N-Marandi (2010) suggest that customers will more likely stay in a hotel they are familiar with rather than take a chance on a competitor offering the same service at a lower cost. This implies a lower influence from competing brands’ efforts on customers, thus protecting a business. Kumar (2008) also points out the value that trusted businesses enjoy. He suggests that loyal customers are very beneficial because they create a lot of new business through word of mouth. Mckinney and Benson (2013) also suggest that brands that enjoy a high level of trust with their customers not only have a sustainable relationship with them, but the relationship confers great value. Marketing in such a scenario requires less financial output, since the customers will buy the products largely because they trust the brand. The authors give the example of Apple, which easily sold products to brand loyalists, even when consumers were unfamiliar with the products such as the iPad launch.

A number of studies demonstrate the positive relationship between brand trust and brand loyalty. For instance, in their study of the antecedents of and influences on behavioural loyalty, Wilkins et al. (2010) looked into the impact of brand trust and brand attitude on behavioural loyalty. They found that although customer satisfaction was the largest determinant of behavioural loyalty, brand trust and brand attitude had a strong influence on behavioural loyalty. Similarly, Martinez and Rodriguez (2013) carried out a survey of Spanish hotel consumers to examine the influence of corporate social responsibility (CSR) on hotel customer loyalty with trust as one of the mediators to show the direct and indirect effects among different constructs. The results confirmed that customer trust has a positive influence on customer loyalty, and CSR associations were found to have a positive influence on customer trust. The findings from these studies indicate that brand trust has a significant and positive influence on customer brand loyalty, implying that increasing brand trust will have the effect of increasing brand loyalty.

A study by Hur et al. (2014) that sought to examine the role of brand trust in the consumption behaviour of luxury brand customers agreed with the notion that brand loyalty is a result of brand trust. Brand satisfaction and perceived value were presented as antecedents of brand trust, while brand risk and brand loyalty were presented as consequences. A survey was conducted among men between the ages of 25 and 54 years who had purchased luxury and non-luxury brand suits within the preceding three months. The results indicated that the effect of brand trust on brand loyalty was greater for luxury brands in comparison to non-luxury brands. This is because luxury brands tend to have more brand equity and therefore more power. A similar study by Younghee et al. (2012) examined the influences of trust and affect on increasing likelihood to purchase luxury brands among male customers. The results showed a significant path from brand affect to brand trust, and from brand trust to brand risk and loyalty that brand management strategies focusing on brand trust building would increase brand loyalty. These studies demonstrate that the level of customer brand loyalty may be predicted by the amount of effort that goes into creating brand trust.

Similarly, Singh et al. (2012) sought to find out whether having a corporate brand perceived to be ethical had any influence on product brands. They carried out a study in which they analyzed the relationship between perceived ethicality at the corporate level on one hand, and brand trust, affect and loyalty at the product level on the other. The results suggested a positive relationship between perceived ethicality of a brand and both brand affect and brand trust. Brand affect had a positive influence on brand trust, which in turn showed a positive relation with brand loyalty. Similarly, Wang (2014) sought to present a dynamic marketing study on the equal influence of brand affect and brand trust in forming brand loyalty. The simulation experiment that was performed revealed that the influences of brand trust on brand loyalty tended to increase with time, while those of brand affect on loyalty reduced. Further, the combined influences of brand trust and affect on brand loyalty became stronger when consumption experiences were accumulated. These findings demonstrate that both brand affect and brand trust have a positive influence on brand loyalty, with brand trust showing a greater influence on loyalty.

In contrast, a study by Osman and Sentosa (2013) found that brand trust only played a mediating role between customer satisfaction and loyalty. The study sought to develop an understanding of the mediating effect resulting from trust on the relationship between customer satisfaction and customer loyalty in Malaysia’s rural tourism. The findings indicated that trust was enhanced by customer satisfaction. In addition, trust was found to only be a partial mediator between customer satisfaction and loyalty. Based on the findings, it was suggested that the relationship between trust and profitability could be found on the influence of trust on customer loyalty; brand trust was a result of customer satisfaction, and customer loyalty resulted from trust. Trusted rural tourists would likely revisit with a low probability of looking for alternatives. These findings suggest that brand trust mediates between customer satisfaction and loyalty, implying that customer satisfaction has a greater influence on brand loyalty than brand trust on its own.

The studies above demonstrate the importance of brand trust on brand loyalty. However, the strength of this relationship requires further examination to determine the significance of brand strategies that focus on building brand trust.

2.6 Conclusion

From the above discussions, it is evident that in order for hotels such as Sheraton to remain competitive, effective strategies must be implemented in creating and fostering customer brand loyalty. Not only will this increase their profitability, but will also result in savings to reduce the amount spent on trying to acquire new customers. Brand identification should be given greater research attention in discovering its full potential as a means of creating loyalty as well as determining whether it is a causal factor for loyalty or only a mediating factor. Service quality as an antecedent to brand loyalty has been established by different researchers, though there has been contrasting views on whether the relationship between the two is direct or indirect. Studies on perceived value reveal contrasting results on whether it creates definite brand loyalty or whether this relationship is dependent on the individual customer. Additionally, brand trust as an antecedent to brand loyalty has been found to be both a causal and mediating factor to loyalty. From these findings, it is apparent that further investigations on brand identification, service quality, perceived value and brand trust as antecedents of brand loyalty should be carried out to determine whether the level of increased brand loyalty will match the investment in any one of these factors.

3. Methodology

3.1 Introduction

This section provides a detailed account of the methodologies that were employed in this study, with particular attention to the methods used to obtain data as well as the subsequent analysis and criteria used to draw conclusions from the same. First, the research strategy is described in detail, with an explanation provided for the appropriateness of the approach chosen for this study. The advantages as well as the shortcomings of the chosen strategy have been highlighted, as well as the measures that were taken to mitigate the shortcomings. The data collection method used is also outlined, with reasons provided for its selection as well as the advantages and disadvantages of the method relative to the alternative methods available. The data analysis process has also been outlined in detail, with a description of the logical steps taken in the analytical process. Finally, the relevant research ethics that were applied in this study have been provided.

3.2 Research Strategy

Singh and Nath (2010) define research strategy as a generalized plan for solving a problem – it includes the structure, the desired solution or objectives of the research, as well as an outline of the devices that will be used to implement the strategy. The common research strategies used by researchers include ethnography, case study, survey, archival research, action research and grounded theory (Saunders et al, 2009). Based on the objectives of this research, case study was selected as the most appropriate research strategy to be used in studying the factors that influence brand loyalty in the hospitality industry. The case study is based on Sheraton Hotel.

Case study was chosen as the research strategy for several reasons. First, it affords the researcher the freedom to make investigations from a broad perspective. Case study is particularly useful in answering questions that have to do with ‘How’, ‘Why’ and ‘What’ (Baxter and Jack, 2008). This allows the researcher to provide analytical generalization as opposed to the statistical generalization that other strategies employ. Case study was the most appropriate approach for examining the abstract phenomena highlighted in the research objectives, which are, brand identification, service quality, perceived value and brand trust, and how each impacts brand loyalty. In addition, case study was found to provide more meaningful answers to questions that have to do with these phenomena as they apply to real life situations, making it more relevant when studying an industry such as hospitality.

Another reason why case study was chosen was because it is an appropriate approach when covering contextual conditions believed to be relevant to the phenomenon under study. In this case, brand loyalty was the phenomenon under study, while Sheraton hotel was the contextual condition in which brand loyalty would be studied. This would help to offer more information on brand loyalty in the hospitality industry, keeping in mind that brand loyalty in other industries has been extensively studied. As such, the findings would be better differentiated for the hotel industry.

Case study was also chosen as the research strategy due to the fact that this study is qualitative in nature. According to Kohlbacher (2006), the case study approach is appropriate when performing an empirical investigation of a phenomenon whose boundaries, both contextual and real life, cannot be clearly defined. It is difficult to provide boundaries within which brand loyalty exists because it relies heavily on human emotion, which cannot be accurately measured. As such, case study is a reasonable approach for this study. In addition, the factors and influences of brand loyalty can only be analysed qualitatively, which further augments the appropriateness of the case study approach.

A significant shortcoming of case study as the research strategy is that since the conclusions are relevant primarily to the institution being studied, they may not be appropriate if generalized to the entire industry. This means that although the findings from the research will be relevant to Sheraton hotel in particular, they may not necessarily be relevant to the entire hospitality industry. This may be as a result of the specific activities that differentiate Sheraton Hotel from other institutions in the hospitality industry. Further, since Sheraton Hotel is a franchise hotel, the findings from the study may not be accurate for non-franchise hotels, local hotels or those that do not focus on the luxury market.

The major source of data for this study was secondary sources, which was a major challenge in light of the case study approach. This was because the data source and analysis techniques that were employed heavily relied on the researcher’s own choices, which could cause them to be arbitrary. As observed by Cooper and Schindler (2001), the lack of a standardised analysis method in case studies increases the possibility of the researcher’s opinions and other biases influencing the results. As such, the results could possibly be indirectly manipulated based on the researcher’s subjectivity. Nevertheless, this challenge was recognised and mitigated through the use of widespread data sources, including academic databases and studies by reliable institutions, thus reducing the researcher’s influence in the determination of the research findings.

3.3 Data Collection

The study relied on secondary data sources, particularly previous studies and past case studies on the topic to be researched. The data collection process was informed by the specific aims and objectives of the research. The collection of data was systematic, focusing on each research objective separately, which made it possible to ultimately collect sufficient data from multiple sources in an effort to achieve the aim of the research. The desk research approach was employed, which entailed the identification and examination of existing literal sources that were considered relevant to the study objectives.

The data collected included relevant material focusing on the research objectives. Since past studies were relied on as secondary data sources, the researcher used the internet, particularly academic databases such as Ebscohost, Emerald, Google Scholar and Jstor among others, to search for past studies that focused on the examination of brand identification, service quality, perceived quality and brand trust in relation to brand loyalty in the hospitality industry. The researcher also searched for past case studies of hotels examining these same factors. The abovementioned academic databases were selected as sources of studies because they are academic in nature and therefore provide reliable studies from which relevant data can be drawn.

According to Saxena (2005), secondary data offers the advantage of economies of time and cost. For this study, time constraints made it necessary to select a data collection method that would not demand much time. As such, the use of secondary data was found to be the most convenient. In addition, in comparison to other data collection methods such as observational studies, surveys or focus groups, the collection of secondary data was found to be the most affordable as it did not demand much financial input.

Another advantage of secondary data is that it helps in clarifying or redefining the problem, as well as providing necessary background information and adding creativity to the research (Saxena, 2005). In studying brand loyalty in the hospitality industry, the use of secondary data offers some background information on the industry itself and the general view of brand loyalty in hotels and other hospitality institutions. In addition, the use of secondary data improves the researcher’s understanding of the problem (Kumar, 2008). In this case, the researcher discovered that other variables such as customer satisfaction were found to be particularly important when studying hotel brand loyalty. In addition, a broader understanding of the attitudes surrounding brand loyalty among hoteliers and managers within the hospitality industry was achieved.

A significant limitation of the reliance on secondary data for this research was the inadequate availability of relevant data. With few studies examining brand loyalty as it applies in Sheraton Hotel in particular, the choice of secondary data compounds the problem since the researcher is limited by the number of relevant literal works that may be considered for this research. For instance, although the researcher used different academic databases (Ebscohost, Emerald, Google Scholar and Jstor), majority of the relevant studies found were replicated in each database. This also limited the researcher’s ability to rely on the most up-to-date data, further compounding the issue of relevance of the data examined. As a result, the research demanded the researcher’s interpretation in linking previous findings with the objectives of this study, increasing the risk of bias. As such, the researcher sought to exploit all the information sources exhaustively to unearth all the available data relevant to the study.

Inaccuracy was another significant limitation of secondary data for this study. With heavy reliance on previous research studies, the weaknesses, limitations and inaccuracies of each study compromises the accuracy of this study’s findings and consequently impacts on the accuracy of the results of this research. Inaccuracy could stem from factors such as the source and purpose of the data used, the time when the data was collected, the methodologies applied, the type of data chosen as well as the consistency of the information (Saxena, 2005). Although the use of various data sources helps to provide a broader view of the subject matter for greater reliability, the weaknesses of the studies and sources from which data has been drawn could be compounded in this research. To mitigate this weakness, the researcher sought to find as much data as possible from well established and reputable organisations to minimize this weakness.

3.4 Data Analysis

The secondary data that was obtained was analysed through the use of qualitative methods and content analysis in particular. Content analysis refers to a research technique in which texts and other meaningful matter is used to make replicable and valid inferences to contexts in order to provide new insights, and increase the researcher’s understanding of particular phenomena to inform practical actions (Krippendorff, 2004). According to Bryman (2004), qualitative content analysis is probably the most prevailing approach used in analyzing documents qualitatively. It involves the searching out of the underlying themes found in the analysed materials.

Content analysis as a research technique has the advantage of being unobtrusive, since it is impossible to influence the subjects due to the fact that participants are not actively involved in the study (Cargan, 2007). It was particularly useful in this study in determining the factors that were most associated with brand loyalty in past researches and studies. Another significant advantage is that since all the data is gathered and analysed by one researcher, the possibility of error is reduced and the data analysis was more consistent. This contributed to the overall reliability of the findings.

Since contextual evaluation of information is a critical part of content analysis, previous study findings were assessed based on the objectives of the research. The data from various sources was then grouped together based on the objectives of the research. As such: studies that looked into brand identification and brand loyalty were grouped together; studies focusing on service quality and brand loyalty were grouped together; studies emphasising perceived value and brand loyalty were grouped together, and studies looking into brand trust and brand loyalty were grouped together.

Comparative analysis was used to organize the data in a standardised format that isolated those with major similarities and differences based on the study objectives. For each objective of the research, data was isolated based on whether the variable in question had a positive or negative relationship with brand loyalty. For instance, in the case of the impact of brand identification, the data establishing a positive relationship between brand identification were separated from those establishing a negative relationship. In the course of the analysis, a third group was established as being significant – those establishing a positive but indirect relationship between brand identification and brand loyalty. This was done for the data focusing on service quality, perceived value and brand trust in relation to brand loyalty as well.

Next, an in-depth assessment of the data was performed to evaluate all the variables included as well as the resulting relationships. In this stage, the research examined the relationships existing between the main factors affecting brand loyalty. In addition, the variables found to be relevant to the relationships between the four main variables and brand loyalty were also examined. Further, the researcher sought to establish those variables that were most relevant to brand loyalty. These included the variables highlighted in the research objectives as well as those discovered in the course of the analysis, such as customer satisfaction.

3.5 Research Ethics

Research ethics generally have to do with the standards of conduct that govern individuals engaged in research, with emphasis on scientific research (Savin-Baden and Major, 2010). As such, research ethics include those norms for conduct that distinguish between what is considered acceptable or unacceptable. This research sought to uphold high standards of research ethics in order to increase the reliability of the findings, thus ensuring their relevance for application in the real world. In particular, research ethics was given careful consideration in light of the use of other academic works as well as the nature of the research.

The use of previous studies as the major source of data for this study significantly increased the possibility of plagiarism. In addition, since numerous studies were used to increase the reliability of the data, researchers with similar findings could possibly be overlooked. As such, particular attention was given to ensuring that proper acknowledgement of sources mentioned was provided for all the material that was examined in the study.

The need to enhance reliability was significant in light of the fact that secondary data does not provide the same level of reliability that primary data would provide. As such, the sources used were drawn from a wide variety of sources including academic databases and studies from established institutions to avoid replication of previous study findings or over-reliance on a few sources. As a result, the research findings were drawn from divergent points of view, which served to increase the credibility and integrity of the findings.

3.6 Summary

The major aspects of the research methodology have been exhaustively discussed in this chapter. The research strategy chosen for this study was case study due to the freedom that the researcher enjoys in making investigations from a broad perspective. In addition, a case study was chosen because it is an appropriate approach when covering contextual conditions that are relevant to the phenomenon under study. Case study is also the most appropriate for qualitative research. On the other hand, the shortcomings of case study as the main research strategy is that the conclusions may not be relevant, since arbitrariness and subjectivity could have been introduced due to the lack of standardised analysis methods and reliance on researcher’s own analytical skills. This was mitigated by the use of widespread data sources. The main source of data collection for this study was secondary data, which offered the advantage of economies of time and cost. Qualitative methods were used to analyse the data collected, with content analysis as the main analysis method. Research ethics were also adhered to in the study, with particular attention given to proper acknowledgement of previous researchers whose data was used as part of this research.


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