Journal of Management Sciences

Vol. 2(1): 166-184, 2015

DOI 10.20547/jms.2014.1502102

An Empirical Investigation on the Effect of Brand Loyalty

Tariq Jalees ∗
Nimra Shahid† Huma Tariq‡

Abstract: This paper examines how satisfaction, brand image, price, packaging
and perceived quality influence brand loyalty. A self-administered questionnaire through
mall intercept method was used for survey purpose. Valid sample size was 300 com-
prising all adults and both genders. The constructs used in this study had established
reliabilities. After ascertaining the normality of data a typical multiple step procedure
was adopted which is inclusive of identifying outliers, ascertaining normality of the
data, reliability analysis, validity analyses, CFA for all the constructs through struc-
tural equation modeling (SEM), and testing the overall model through SEM. Derived
hypotheses results were assessed on SEM’s output that is standardized regression es-
timates (SRE) and critical ratios. Price was the strongest predictor of brand loyalty
followed by packaging and satisfaction. Company image and perceived quality had no
relationships with brand loyalty. Some of the findings of this study are consistent with
the earlier studies, while others are in-consistent to earlier research. Implications for
managers were drawn from the results.

Keywords: Brand loyalty, satisfaction, quality, price, company image and pack-
aging.

Introduction
Ever increasing competition and consumers empowerment have forced marketers to
find innovate modes and methods for gaining competitive advantage, and getting cus-
tomer’s attention (Rajumesh, 2014). Most of the competitors are employing all the
available marketing tools and techniques due to which it has become extremely diffi-
cult to create product and brand differentiation (Bianchi, Drennan, & Proud, 2012;
Rajumesh, 2014)
Developing and maintaining a strong loyal customer base is generally preferred by
the marketers as it is cost effective and requires comparatively lesser efforts. Some of
the commonly used techniques for creating loyal customers are branding, promotion,
prices and product differentiation. Techniques such as creating brand trust, brand
attitude and brand experience are also being used for developing long term relation
and brand loyalty with the customers (Brakus, Schmitt, & Zarantonello, 2009; Carroll
& Ahuvia, 2006; Jalees & DeRun, 2004). Thus the brand loyalty concept is considered
∗ Dr Tariq Jalees is an Associate Professor and Head of Marketing, College of Management
Sciences, Karachi Institute of Economic and Technology, Creek, Karachi, Pakistan, E-mail:
tariquej2004@[Link]
† Ms. Nimra Shahid is a graduate of Iqra University,Gulshan. Campus
‡ Ms. Huma Tariq is a Design Engineer, at Techno-Consult International, Karachi, Pakistan,
E-mail:[Link]@[Link]

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as a very strong tool for product differentiation, attracting new customers and retaining
the old ones (Rajumesh, 2014).
Studies have also explored the effects of brand image, sales promotion, brand differ-
entiation, and customer satisfaction on brand loyalty (Brakus et al., 2009; Zarantonello
& Schmitt, 2010). Most of the studies have not adequately addressed the effect of
marketing mix along with company image and perceived satisfaction on brand loyalty,
especially in the context of Pakistan (Hanif, Hafeez, & Riaz, 2010; Nemati, Khan, &
Iftikhar, 2010; Osman & Subhani, 2010). Thus the aim of this study is to measure the
effects of price, quality, satisfaction, packaging and company image on brand loyalty.

Overview of the Literature

Most of the studies have explored the effect of marketing mix on brand loyalty. Some
are based on six variables, while others are on two variables. For example a study on
Malaysian Hyper Market found that price promotion was the strongest predictor of
brand loyalty followed by store-image, distribution intensity, and price; while advertis-
ing spending had no significant relationship with brand loyalty (Heng, 2011). Others
in this context claims that awareness, packaging, and pricing have significant positive
effect on brand loyalty (Dhurup, Mafini, & Dumasi, 2014). In the context of wine cat-
egory it was found that wine knowledge and wine experience indirectly affects brand
loyalty mainly through wine brand trust and wine brand satisfaction. Moreover, the
study also maintained that consumer satisfaction is the strongest predictor of brand
loyalty (Bianchi et al., 2012).
While measuring the effect of satisfaction and commitment on brand loyalty, it was
observed that customer satisfaction has a significantly positive impact on loyalty which
also influences repurchase, significantly. Additionally, it was also pointed out that that
the effect of satisfaction and association with a brand do not vary with gender and
location (Dimitriades, 2006). Research in the domain of chocolate industry has also
validated that customer satisfaction results in increased repurchase intensity, which
leads to brand loyalty (Kuikka & Laukkanen, 2012).
Price and quality, effects on brand loyalty have also been explored in dairy products
category. The study found that if price and quality are adequately balanced it will
have positive effect on long term loyalty (Boniface, Gyau, & Stringer, 2012). The
relationship of customer satisfaction and price with brand loyalty was again revalidated
in the domain of internet book store. It was indicated that lower price attracts heavy
shoppers, who are more loyal as compared to light shoppers (Chiou & Pan, 2009).
Effects of brand on brand loyalty have also been explored in literature. In this
context it has been found that brand name and reputation strongly affects brand
loyalty. Thus the study suggested that while selecting the company or brand name
extensive research is necessary as the meaning of brand name may vary from one
country to other country (Balmer et al., 2006). Frequent travellers generally have a
higher awareness of the brand names and the services associated with them due to
which they prefer to stay in the branded hotels; and thus develop a long term relation
and loyalty with the branded hotels (Kam Fung So & King, 2010). Consumers might
develop brand loyalty with private brands as long there is a balance between price
and quality (Glynn & Chen, 2009). Additionally it has been observed that brand
availability plays a significant role for attracting customers which is important for
selling and retaining them (Srinivasan, Park, & Chang, 2005).
While exploring the effect of personality on brandy loyalty it was observed that

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close association of brand personality and consumer personality results in positive at-
titude towards the brand and brand loyalty (Hayes, Alford, Silver, & York, 2006).
Customers with hedonic values give significant importance to the brand personal-
ity and are strongly attracted to the brands with strong personification (Mooradian,
Renzl, & Matzler, 2006).
Brand promotional activities have no effect on brand loyalty. as these activities
are generally more attractive to non-brand loyal (Tsao, Lin, Pitt, & Campbell, 2009;
Van den Brink, Odekerken-Schröder, & Pauwels, 2006). However, Consumer percep-
tion on CRM is positive which also affect their brand loyalty positively (Van den Brink
et al., 2006). Generally late buyers are more loyal to a brand because they take time
to assess the brand attributes and once satisfied they stay for a longer period with the
brand (Shang, Chen, & Liao, 2006).

Conceptual Framework
Based on the above literature review and the objectives of the study a conceptual
framework has been developed which is depicted in Figure 1. Subsequently, the depen-
dent variable (brand loyalty) is discussed followed by discussions on the relationships
of independent variables with brand loyalty (dependent variable).

Figure 1: Conceptual Framework

Brand Loyalty
Repeated purchasing behavior was originally associated with brand loyalty (Shang
et al., 2006). Since repeat purchase connotes temporary acceptance, therefore this
concept was further broaden by including attitudinal and behavioral loyalty (Jacoby
& Kyner, 1973). Behavioral loyalty refers to consumer repeated purchase behavior for
the same brand. Whereas, attitudinal loyalty refers to consumer’s commitment for

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purchasing a brand because of the values associated with it (Chaudhuri & Holbrook,
2001).
Attitudinal loyalty positively effects behavior loyalty (Gounaris & Stathakopoulos,
2004). Moreover, consumer’s high involvement in a brand also leads towards brand
loyalty or commitment (Shang et al., 2006). Consumers who are highly involved with
a brand are able to assess product attributes as a result they remain committed and
loyal to the selected brand (Howard & Sheth, 1969). Consumers with low brand
involvement are generally less committed therefore they are more vulnerable to other
available options (Tyebjee, 1979).
A three stage model has also been suggested for understanding the relationship
of involvement and behavior loyalty (Shang et al., 2006). According to this model
initially a high level of activities are generated to increase consumer involvement in
the brand. Subsequently these activities effect psychological commitment towards the
brand which ensure strong and positive attitude towards the brands. As a consequence
loyal consumers are reluctant to switch to other brands (Alexandris, Zahariadis, Tsor-
batzoudis, & Grouios, 2004).

Customer Satisfaction and Brand loyalty

Since decades, the focus of companies is on customer satisfaction as it leads to increase
in the market share and retention of customers (Dimitriades, 2006; Hansemark &
Albinsson, 2004). Additionally it is believed that satisfied customers not only stay
with the companies for a longer period but they are not price sensitive (Grace &
O’cass, 2005; Zineldin, 2000).
Contrarily a study found that satisfied customer might switch to other brands but
loyal customer would have a long term relationship with the company (Jones & Sasser,
1995). Satisfaction is also considered as a function of brand loyalty therefore satisfied
customer due to repeat purchase contributes in the profitability and sales of the com-
pany (Bowen & Chen, 2001; Fecikova, 2004). It has also been found in several studies
that customer commitment also plays a mediating role between customer evaluation
of the company and their long term relationship with the company (Fullerton, 2003;
Zins, 2001). Several studies have empirically demonstrated that satisfaction plays a
significant role in brand loyalty (Dimitriades, 2006; Hansemark & Albinsson, 2004).
Others while validating the relationship of customer satisfaction and brand loyalty
also maintained that a satisfied customer will continue to purchase the brand, and in
long run he will become a habitual buyer of the brand (Kuikka & Laukkanen, 2012;
Singh & Sirdeshmukh, 2000; Taylor, Celuch, & Goodwin, 2004).

Brand Image and Brand loyalty

Brand image is a consumer’s perception about brand’s attitudes, benefits and at-
tributes (Keller, 1993). Consumers use brand image to relate their needs and wants
and differentiate between competing brands; which helps them in buying a particular
brand (M.-H. Hsieh, Pan, & Setiono, 2004). Feelings and attitudes toward an object
or person are also associated with a brand. All marketing programs and strategies are
pivoted around brand and brand image (Roth, 1995). Thus a brand image helps con-
sumer in brand-differentiation and reasons to purchase a brand or develops a positive
attitude towards brand and extension (D. A. Aaker & Equity, 1991; Pappu, Quester,
& Cooksey, 2006).

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Earlier research supports that brand image has a positive effect on brand loyalty
which from a perspective is considered as customer repurchase intention (Upamannyu,
Gulati, & Mathu, 2014). Brand image helps in the development of consumer’s con-
fidence and special bonding with the brand, which positively affects brand loyalty
(Pinar, Girard, & Eser, 2012; Vázquez-Carrasco & Foxall, 2006).
Others have also emphasized that successful companies depend on their image for
selling their products which positively influence customer loyalty (J. Aaker, 1999; Af-
sar, Rehman, Qureshi, & Shahjehan, 2010). Brand image is not only a first interaction
with customers, but it also depicts the quality and features of the brand, due to which
customers develop long term relationships with the brand (Abbasi, Akhter, Ali, &
Hasan, 2011).
Others in this context also observed that the emphasis on brand image have in-
creased significantly because customers perception about the quality and features are
linked with it, which leads to long term relationship with the brand (Saeed et al., 2013)
While others validating this relationship found a strong relationship between brand
name and brand loyalty and also concluded that strong brand name have stronger
effect on the brand loyalty (Yee & Sidek, 2008). While validating the relationship of
brand image and loyalty, it was also suggested that prestigious brand image retards
consumer’s switching behavior (Foster & Cadogan, 2000). Brand image not only is
a source of customer’s perceived satisfaction and quality, but it ultimately leads to
customer loyalty (Fornell, Mithas, Morgeson III, & Krishnan, 2006).

Pricing and Brand Loyalty

Price is an important element of the marketing mix which refers to the money value
customers attaches to goods for exchange transaction (Farahmand & Chatterjee, 2008;
Kent & Omar, 2003). Consumer perception of price being high, low or fair affects
his/her buying behavior and loyalty (Ahmad & Vays, 2011; Mohd Suki, 2013).
Pricing has a strong relationship with company’s strategies and it has significant
interaction with the other marketing mix due to which companies create segmenta-
tion and send signals to the competitors and consumers about their product offering
(Atchariyachanvanich & Okada, 2007; Eun Park, Yu, & Xin Zhou, 2010; Yesawich,
2004). A good pricing strategy plays a significant role in customer’s attraction and
retention which leads towards long term relationship (Shang et al., 2006). Pricing thus
plays a significant role in creating loyalty, retaining existing customers, and attract-
ing new ones provided consumers perceives pricing strategy to be straight forward
and honest, rather than inconsistent and confusing (Campo & Yagüe, 2007; Dunne &
Lusch, 2008; Sahay, 2012).
Thus it has been argued that since price plays a significant role in the context
of performance and final destiny of consumers and company therefore it has positive
and predicative relationship with brand loyalty (Dhurup et al., 2014). Some are of the
opinion that that price and brandy loyalty has a positive relationship, while others em-
phasized that these two factors are highly correlated (Sirohi, McLaughlin, & Wittink,
1998; Yee & Sidek, 2008; Heng, 2011). On the other hand it has been also found that
all the customers do not use pricing as an evaluative criterion (Meer, 1995). Disloyal
customers might use pricing as an evaluation criteria but loyal customers are least
bother about it; they are willing to pay premium pricing and are not price sensitive
as compared to disloyal customers (Heng, 2011; Jackson, 2010).

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Packaging and Brand Loyalty

Packaging is inclusive of design, and filling/wrapping of the products for effective
protection, storage, transportation and identification of the brand (Dhurup et al.,
2014; Kent & Omar, 2003). Packaging not only reflects product attributes but also
attract uninterested customers towards the product (Dhurup et al., 2014). It not
only helps in creating product differentiation but also helps consumers to associate
themselves with the company and brand (Belén del Rı́o, Vazquez, & Iglesias, 2001;
Shafiq, Raza, & Zia-ur Rehman, 2011).
Thus the right combination of visual cues such as labeling, information, images
packaging helps in increasing the sales of brand which ultimately influence purchase
intention and brand loyalty (Imram, 1999). Packaging not only adds value to the brand
but it is an efficient tool for product differentiation and stimulating positive buying
behavior and retention (Pauwels Delassus & Mogos Descotes, 2012; Underwood, Klein,
& Burke, 2001; Wells, Farley, & Armstrong, 2007). Thus the right packaging helps in
getting consumer’s attention and enhancing brand image (Vila & Ampuero, 2007).
Several studies have found that effective packaging carves a unique position in
consumers’ mind, due to which their confidence increase in terms of reliability and
performance; which ultimately leads to purchase of the product and brand loyalty
(Bed, 2008; Dhurup et al., 2014; Hysen et al., 2008).

Perceived Quality and Brand Loyalty

The quality conceptually has two perspectives. One is objectivity and other is per-
ceived quality (Brunsø, Bredahl, Grunert, & Scholderer, 2005). Objective quality refers
to measureable aspects such as product features, product performance, durability and
quality control. On the other hand perceived quality is consumer’s aesthetic percep-
tion of brand image (Pauwels Delassus & Mogos Descotes, 2012). If perceived quality
is high, and the product meets consumer exception then it will play a significant role
in developing brand loyalty.
This relationship of perceived quality and brand image has been validated by oth-
ers. They found that higher the perceived quality, the higher is satisfaction level which
will lead to higher level of brand loyalty (Gillani, Khan, & Yousaf, 2013). Others in this
context found that although image via perceived quality has an effect on the loyalty
but perceived quality has direct effect on brand loyalty as well (Bloemer, De Ruyter,
& Peeters, 1998). Contrarily, others found that service quality has effects on attitude
and satisfaction but indirect effect on brand loyalty (Sivadas & Baker-Prewitt, 2000).
However, in an another study it was found that the relationship of quality services
and brandy loyalty varies from industry to industry, but the study also suggested that
consumer’s brand loyalty is stronger in those industry where switching cost is high;
and low brand loyalty where the switching cost is low (De Ruyter, Wetzels, & Bloemer,
1998).

Research hypotheses
Based on the above discussions and objective of the study the following hypotheses
have been formulated:
H1: Satisfaction has a positive effect on brand loyalty.
H2: Brand image has a positive effect on brand loyalty.
H3: Pricing has a positive effect on brand loyalty.

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H4: Packaging has a positive effect on brand loyalty.

H5: Perceived quality has a positive effect on brand loyalty.

Methodology
Procedure
Three hundred twenty five respondents were approached and the response rate was
95% (309 sample), of which nine were incomplete and hence were discarded. The valid
sample size was 300 which is appropriate for the study of this magnitude (Raza &
Hanif, 2013; Sharif & Bukhari, 2014; Ali & Raza, 2015). Of the total valid sample 180
(60%) were male and the rest 120 (40%) were females. In terms of marital status 135
(45%) were married and the rest 165 (55%) were single. The age of all the participants
was between 19 to 47 (M= 24.20, SD=2.45).
In terms of education 135(45%) had education up to secondary school certificate
(SSC), 120 (40%) had a higher education certificate (HSC), 30 (10%) had bachelor’s
degrees, and the rest 15(5%) had at least master’s degree.

Measures
The questionnaire used for this study was based on five points Likert scale. Five points
depicting a very high agreement and one a very low agreement. The questionnaire for
this study had seven sections. Section one on demographic data was based on nominal
scale. Section two was on perceived satisfaction of consumers, it had five questions
two were adopted from previous study conducted by Kuikka and Laukkanen (2012),
and the rest three from the study undertaken by Grace and O’cass (2005). Section
Three on Company image was based on five items. Three were taken from the study
Pappu et al. (2006), and the rest two from Pinar et al. (2012). Section four on Price
had five items; two were taken from the study Mohd Suki (2013) and the rest two from
Eun Park et al. (2010). Section five on perceived quality was also based on five items.
Three items were taken from the study Pauwels Delassus and Mogos Descotes (2012)
and the other two from Pappu et al. (2006). Section six on packaging had five items
three were adopted from the study Gelperowic and Beharrell (1994) and two from
Rashid [Link]. (2011). Section seven on brand loyalty had seven items all taken from
the study Shang et al. (2006). All the constructs had reliabilities ranged from 0.75 to
0.85 (Pauwels Delassus & Mogos Descotes, 2012; Gelperowic & Beharrell, 1994; Grace
& O’cass, 2005; Kuikka & Laukkanen, 2012; Pappu et al., 2006; Saeed et al., 2013;
Shang et al., 2006; Mohd Suki, 2013).

Measurement
After preliminary exercise such as identifying missing data and outlier’s; normality
and reliability of each construct was ascertained. Normality was based on Skewness
and Kurtosis analyses and a bench mark of ± 1.5 was used (De Run, 2004) and the
reliability through Cronbach’s alpha which should be at least 0.70 (Leech, Barrett, &
Morgan, 2005) (Refer to Table 1). Subsequently CFA for each construct and the final
model were measured separately. In this paper the following fit indices are reported:
(1) Three from Absolute Fit Measures which are Chi Square (χ2 ), Relative Chi Square
(CMIN/df) and The Root Mean Square Error of Approximation (RMSEA) (2) Two

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from Relative Fit Measures which are the Comparative Fit Index (CFI), and Normed
Fixed Index (NFI), and (3) One from Parsimonious Fit Measures which is Parsimony
Normed Fit Index (PNFI) (De Run, 2004). The criteria with for each index measure
is depicted in Table 2 with the results.

Results
Descriptive Analysis
The instrument used for this paper comprised of constructs which were earlier used by
the researchers and therefore have established validities and reliabilities. However, the
reliabilities of the used constructs were again reestablished. Additionally normality
was assessed on Skewness and Kurtosis analyses. The summarized results are presented
in Table-1.

Table 1: Descriptive and Reliability of Initial Constructs

Reliability Mean Std. Deviation Skewness Kurtosis
Satisfaction 0.938 3.445 1.063 -0.681 -0.319
C. Image 0.878 3.671 0.882 -0.803 0.588
Quality 0.898 3.569 0.933 -0.833 0.370
Packaging 0.770 3.597 0.979 -0.029 1.416
Price 0.818 3.557 0.833 -0.742 0.916
Brand loyalty 0.941 3.612 0.979 -0.994 0.548

Table-1, shows that the reliably of brand loyalty was the highest (α =.941, M=3.612,
SD= 0.979); whereas reliability of packaging was lowest (α =.770, M= 3.597, SD=
0.979) which are within the acceptable range (Leech et al., 2005) indicating that the
respective items have reasonable internal consistency and reliability.
Table-1, above also shows that since all the constructs in terms of Skewness and
Kurtosis are within the acceptable range of ± 1.5 (De Run, 2004), therefore it could
be safely assumed that the data has normal tendency.

Validity of the Constructs

Convergent Validity
The factor loadings of all the indicator variables are at least 0.40 and goodness of
fit indexes are also within the prescribed limit; indicating that convergent validity
requirements have been met (Y.-C. Hsieh & Hiang, 2004; Shammout, 2007).

Discriminant Validity
Discriminant validity shows the uniqueness of the variables (Hair, Anderson, Tatham,
& Black, 2007). Discriminant validity was established though correlation of the entire
constructs on one to one basis. The results of discriminant validity show that the
highest correlations was between price (M = 3.557, SD = 0.881, N = 300) and brand
loyalty (M = 3.661, SD = 0.957) with, r (300) = .0.662, p = 0.0<.0.01; and the lowest
was between company image (M = 3.671, SD = 0.881) and brand loyalty (M = 3.661,

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SD = 0.957) with, r (300) = 0.472. The results shows that each pair of the correlation
are within the prescribed limit (Leech et al., 2005)

Confirmatory Factor Analysis

CFA is a test for measurement theories (Hair, Black, Babin, Anderson, & Tatham,
2006). In CFA, the specified number of factors and items (indicators) are initially
developed on theory than required statistical analyses are carried out. The summarized
CFA results are presented in Table 2.

Table 2: Confirmatory Factor Analysis

Chi Square (A)

Deg. of Freedom
Construct

Probability

CMIN/df (A)

RIMES (A)

CFI (B)

NFI (B)

PNFI (C)
Satisfaction 13.130 2 0.001 6.566 0.136 0.988 0.986 0.329
C. Image 22.110 5 0.000 4.421 0.107 0.978 0.972 0.486
Quality 12.280 5 0.002 3.856 0.098 0.984 0.979 0.489
Packaging 4.216 2 0.121 2.108 0.061 0.995 0.990 0.330
Pricing 4.979 2 0.083 2.490 0.071 0.990 0.984 0.328
Brand loyalty 28.610 5 0.000 5.722 0.126 0.977 0.973 0.486
Criteria Low n/a < 0.05 < 5.0 > 0.10 > 0.95 > 0.50 > 0.50

Factor loading for each observed variable is at least 0.40 and hence meeting the
minimum requirement of factor loading o. Moreover, standardized residual were below
± 2.58 (Hair et al., 2007). All the Fit indexes for each of the exogenous model are
within/close to the prescribed limit (See Table 2). However, the index of PNFI is
lower than the minimum criteria of 0.50. Since the rest of the indices were within the
prescribed limit and two stage SEM analyses is being carried therefore it was assumed
that it will cross the prescribed at the final stage of testing the overall model (Gerbing
& Anderson, 1988) which it has, and PNFI at the final stage is PNFI= 0.734>0.50
(refer to the overall results section 4.4).

Overall Model
The overall SEM model comprise of five exogenous models namely, satisfaction, com-
pany image, price, perceived quality and packaging and one endogenous model brand
loyalty. The CFA result of each exogenous model has been discussed in earlier section,
the overall final model is depicted in Figure 1.

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Figure 2: Final SEM Model

Figure-2 for the overall model shows that factor loading for each observed variable
is at least 0.40 and hence meeting the minimum requirement Moreover, standardized
residual were below ± 2.58 (Hair et al., 2007). Goodness of fit indexes as shown below
indicates that the overall model is a good fit:
1. The Chi Square value was significant (x2 = 208.596, DF= 120, p= .000 < .05).
The CMIN/df (Relative χ2 /df) was 1.738< 5. The Root Mean Square Error of
Approximation (RMSEA) = 0.050 < 0.08 meet absolute fit measure criteria.
2. The Comparative Fit Index (CFI) = 0.972> 0.90 and Normed Fit Index (NFI)=
0.736 > 0.900 meet Relative Fit Measures.
3. Parsimony Normed Fit Index PNFI= 0.734>0.50 meets from Parsimonious Fit
Measures

Hypotheses Results
The SEM model depicted in Figure-2 and summarized SEM results presented in Table
3 shows that of the five hypotheses three failed to be rejected (accepted), and two were
rejected.

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Table 3: Hypothesized Relationship

Hypothesized Path Standardized Critical Supported
Estimates Ratio
Satisfaction and Brand Loyalty 0.178 2.841 Yes
Image and Brand Loyalty 0.094 0.993 No
Price and Brand Loyalty 0.429 2.636 Yes
Packaging and Brand Loyalty 0.274 2.841 Yes
Quality and Brand Loyalty 0.086 0.967 No

Discussion and Conclusion

In view of the competitive environment and lower cost associated with brand loyalty
it has become an important tools for the marketers. Thus the objective of this study
was to ascertain the effects of brand image, satisfaction, price, packaging, perceived
quality on brand loyalty. Of the five hypotheses three were accepted and two were
rejected. A positive relationship between price and brand loyalty was found followed
by packaging and satisfaction. While company image and perceived quality have no
relationships with brand loyalty. The hypothesized results are consistent with some
earlier research and inconsistent with others earlier studies; which are discussed in the
following paragraphs.
The hypothesis (one) on the positive effect of satisfaction and brand loyalty was
accepted (S. Estimate = 0.178, CR= 2.489 < 0.05). Comparatively, in some studies
it was found that satisfied customer might switch to other brands but loyal customer
would have a long term relationship with the company (Jones & Sasser, 1995; Mc-
Carthy, 1997). Additionally, contrary to the result of this hypothesis; several studies
found that customer commitment also plays a mediating role between customer eval-
uation of the company and their long term relationship with the company (Fullerton,
2003; Zins, 2001). However, most of the earlier studies are of the view that customer
satisfaction positively affects brand loyalty to the extent that they will become habit-
ual buyers of the brand (Dimitriades, 2006; Hansemark & Albinsson, 2004; Kuikka &
Laukkanen, 2012; Singh & Sirdeshmukh, 2000; Taylor et al., 2004). In fact some of the
researchers have gone up to the extent of treating customer satisfaction as a function
of brand loyalty (Bowen & Chen, 2001; Fecikova, 2004).
The hypothesis (two) on the positive effect of brand image and brand loyalty was
rejected (S. Estimate = 0.094, CR= 0.993 > 0.05). This was a surprising result as
most of the earlier studies support that brand image has a positive effect on brand
loyalty which from a perspective is considered as customer repurchase intention (Afsar
et al., 2010; Abbasi et al., 2011; Saeed et al., 2013; Yee & Sidek, 2008). In this context
other have observed that the emphasis on brand image these days have increased
significantly because customers’ perception about the quality and features are linked
with it; which leads to long term relationship with the brand (Saeed et al., 2013).
Reasons for this inconsistency result is that the local market is price sensitive, and
additionally in Pakistan about 65% goods sold are counterfeit or look alike (Jalees &
DeRun, 2004).
The hypothesis (three) on the positive effect of price and brand loyalty was ac-
cepted (S. Estimate = 0.492, CR= 2.636 < 0.05). In comparison to this results in one
study it was found that a good pricing strategy plays a significant role in customer’s

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attraction and retention which leads towards long term relationship (Sahay, 2012).
Other studies also emphasized on the effect of pricing and brand loyalty; and they ob-
served pricing plays a significant role in creating loyalty, retaining existing customers,
and attracting new ones provided consumers perceives pricing strategy to be straight
forward and honest, rather than inconsistent (Campo & Yagüe, 2007; Dunne & Lusch,
2008; Sahay, 2012). However it may be pointed out that some are of the opinion that
that price and brandy loyalty has a positive relationship, while others emphasized
that these two factors are highly correlated (Sirohi et al., 1998; Yee & Sidek, 2008;
Heng, 2011). Studies in this context also found all the customers do not use pricing
as an evaluative criterion (Meer, 1995). Disloyal customers might use pricing as an
evaluation criteria but loyal customers are least bother about it; they are willing to
pay premium pricing and are not price sensitive as compared to disloyal customers
(Heng, 2011; Jackson, 2010).
The hypothesis (four) on the positive effect of packaging and brand loyalty was
accepted (S. Estimate = 0.086, CR= 0.967 > 0.05). This result is consistent with
earlier studies. For example the studies have found that with the right combination of
visual cues such as labeling, information, images packaging helps in increasing the sales
of brands which ultimately influence purchase intention and brand loyalty (Imram,
1999). Packaging not only adds value to the brand but it is an efficient tool for
product differentiation and stimulating positive buying behavior and retention which
ultimately leads to brand image and loyalty (Pauwels Delassus & Mogos Descotes,
2012; Underwood et al., 2001; Vila & Ampuero, 2007; Wells et al., 2007). Other
studies while substantiating the relationship of packaging and brand loyalty argued
that effective packaging carve a unique position in the consumers’ mind, due to which
their confidence increase in terms of reliability and performance which ultimately leads
to purchase of the product and brand loyalty (Bed, 2008; Dhurup et al., 2014; Bytyqi
et al., 2008).
The hypothesis (five) on the positive effect of perceived quality and brand loyalty
was rejected (S. Estimate = 0.086, CR= 0.967 > 0.05). This study was inconsistent to
most of the earlier and consistent with other studies. Studies have found that higher
the perceived quality, the higher is satisfaction level which will lead to higher level of
brand loyalty (Gillani et al., 2013). Contrarily, others found that service quality has
effects on attitude and satisfaction but no direct effect on brand loyalty (Sivadas &
Baker-Prewitt, 2000). However, in another study it was found that the relationship of
quality services and brandy loyalty varies from industry to industry, but the study also
suggested that generally brand loyalty is stronger in those industry where switching
cost is high and low brand loyalty where the switching cost is low (De Ruyter et al.,
1998). This result is inconsistent with early studies mainly because the local market is
price sensitive. Additionally, consumer looks for a delicate balance between perceived
quality and price (Boniface et al., 2012).

Limitation and Future Research

The conceptual framework used for this study is a simplistic model. Some of the vari-
ables like price have a moderating effect between quality and brandy loyalty was not
used in this study; which could be explored in future research. Effects of demographics
in the conceptual framework were not considered. Future research could incorporate
the same the conceptual framework as well. Moreover, the effect of independent vari-
ables might have different effects on attitudinal loyalty and behavior loyalty. Future
studies could measure these affects separately. This study was limited to one city.

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Future studies could be cross cultural comparative studies.

Implication for Managers

The findings of the study were that satisfaction and price have a positive impact
on brand loyalty. Thus these tools could be effectively used for developing brand
image, brand loyalty and long term relationship. Although the findings of this study
were that perceived quality had no effect on brand loyalty. Despite these results the
importance of perceived quality could not be ignored. However, a delicate balance
between pricing and perceived quality is necessary for attracting and retaining the
customers and developing brand image (Boniface et al., 2012). The study’s results
also indicate that packaging has an effect on brand loyalty. In view of its importance
the focus should be more on packaging, especially considering that company image in
this study had no effect on brand loyalty. Thus the marketing needs to develop more
synergy between brand image and company image.

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