Keywords

Customer Trust, Customer Perceived Value, Customer Satisfaction, Customer Loyalty, Customer Relationship, Covid19.

Introduction

Covid19 crisis has been a threat to all business. Business houses are seen to struggle to survive in the difficult period. The first wave peaked in September 2020 and started to drop in January 2021(Times of India, April 19, 2021; Michael Safi, 21 April 2021). Though after a long lockdown business started to operate but with the increase in number of infected persons in the second wave starting March 2021(Michael, 2021) the lockdown was imposed again. The second wave was much larger which saw shortages of vaccines and oxygen cylinders and medicines. Barring essentials all other product manufacturers were affected by the lockdowns. In order to survive in the crisis brands started adopting new strategies fitting the requirements of the consumers (ET, Feb 5, 2021). The lockdown brought in behavioral changes in consumers due to the work from home culture and reducing income level. The changing work culture and staying locked in homes gave rise to unusual demand for products and services. The buying pattern changed along with the changing consumption pattern. As consumers were forced to stay indoors there was a rise in home delivery services (ET, Feb 5, 2021a). The crisis also led to the growth of digital transactions and payment. Brands have rapidly changed their marketing strategies. Traditionally consumers used to go to the outlets searching for their desired product or services. But with the limitations in movement it is seen that brands are trying out to reach the consumers in all possible manners. There has been a shift in the purchasing pattern too. As most of the brands are not available due to movement restriction and restriction of logistics there is a shift from buying the regular brands. Consumers are seen purchasing other brands due to non-availability of their regular brands. Moreover, local brands are gaining popularity because of good quality and their local presence and availability (ET, Feb 5, 2021bs). Trust is an important factor which drives brand value. It is in this crisis that consumers are buying brands that they think are reliable and safe (ET, Dec 7, 2020). Consumers are too concerned about the health and safety of their own health and that of their family members. Trust factor is the foremost criteria when selecting a brand now.

Trust seems to influence the satisfaction level and finally influence customer loyalty. Trust also seem to influence perceived customer value and thus influence customer loyalty.

Literature Review

Achieving high customer retention is the key to success of a service provider and to generate profitability (Zeithaml, et al. 1996). The covid19 crisis has been a threat globally to all business. In uncertain business environment it becomes difficult to retain the loyal customers. The profitability is going down as customers are purchasing many products that is available around in the locality and which can be delivered to their location. More than brand loyalty it is the availability and good quality which matters now. Trust seems to play a key role while purchasing. Though research shows that customer satisfaction leads to positive behavioral outcomes, yet perceived value is able to predict repurchase intentions more that the customer satisfaction (Oh, 2000; woodruff, 1997). It is the value which customer perceives is worth the purchase.

Customer Trust

Trust is a key driver in developing a bond between the customer and the service provider and development of a committed relationship (So et al., 2016b). Social exchange theory illustrates that trust between the customer and the brand helps in mutual interaction (Cheng & Chen, et al. 2017). The mutual interaction between the customer and the brand helps in building up strong relationship. Strong relation relationship aids in customer satisfaction. A strong relationship also aids in increasing the customer perceived value. Positive customer trust aids in developing brand loyalty (Palacios-Florencio, et al. 2018; Veloutsou, 2015). It all depends on consumers, the more the trust the more the brand loyalty (Huang, 2017). Based on the discussion the following hypotheses are developed.

H1: Customer trust has a positive influence on customer perceived value

H2: Customer trust has a positive influence on customer satisfaction

H3: Customer Trust has a positive influence on brand loyalty

Customer Perceived Value

Measuring customer perceived value is important due to growing interest of customers on value driven services (El-Adly & Eid, 2015). Customer perceived value is the benefits of using a product after deducting the costs associated (Zeithaml, 1988). Equity theory also talks about the customer perceived value considering all monetary and non-monetary transactions (Bolton & Lemon, 1999; Yang & Peterson, 2004). Experience from all customer transactions, positive and negative add to the customer perceived value. Customers compare the perceived value while making any purchases. The behavioral model (Fishbein & Ajzen, 1975) shows that the cognitive evaluation like the perceived value leads to affective outcomes like satisfaction (Cronin et al., 2000). It is seen that customer perceived value has a strong influence on the purchase intention (Baker, et al. 2002; Grewal, et al. 1998; Oh, 1999; Zeithaml, 1988). Research shows perceived value has a positive effect on customer satisfaction and loyalty (Chen & Tsai, 2008; Cronin, et al. 2000; Yang & Peterson, 2004) and patronage (Chen & Dubinsky, 2003). Based on the discussion the following hypotheses are proposed.

H4: Customer perceived value has a positive influence on customer satisfaction.

H5: Customer perceived value has a positive influence on brand loyalty.

Customer Satisfaction

Customer satisfaction is key to success of a firm. Customer satisfaction is the customer evaluation of the expected versus the actual performance (Churchhill & Surprenant, 1982). Customer satisfaction is transaction specific like assessment after a specific occasion and also overall assessment of the entire service encounters and experience (Rosen & Suprenant, 1998). Satisfaction helps in developing a long-lasting relationship with customers and help gain positive support for the brand. Customer satisfaction is the outcome of the judgment of the customers on the services provided by the organization (Yang & Peterson, 2004; Chen &Tsai, 2008). Satisfaction helps to develop a positive image of the brand. Customer satisfaction has a positive and direct influence on customer loyalty (Fornell, 1992). Customer satisfaction helps in building loyal customers, positive WOM and sustained profitability (Greenwell et al., 2002; Liu & Jang, 2009). Based on the discussion the following hypothesis is proposed.

H6: Customer satisfaction has a positive influence on brand loyalty.

Brand Loyalty

Customer loyalty is the key to sustain long in the competitive environment (Krishnamurthi & Raj, 1991). Customer loyalty is an outcome of both attitudinal and behavioural response (Chen & Tsai, 2008). Loyalty helps in creating competitive advantage (Lee & Cunningham, 2001). Loyalty programmes are designed in order to attract and satisfy customers (Tanford et al. 2012).

Based on the literature review a conceptual framework is designed as depicted in Figure 1.

Figure 1 The Conceptual Framework

Methodology

Data Collection and Descriptive Statistics

Data was collected from respondents who bought any branded item. The sample size is 201. Out of the total respondents 67.2% of the respondents were male, and 32.8 % of the respondents were female. 1.5% of the respondents were in the age group less than 18 years, 70.1% of the respondents were in the age group 18 years to 28 years, 20.9% of the respondents were in the age group 29 years to 39 years, 4.5% of the respondents were in the age group 40 years to 50 years, 3% of the respondents were in the age group 51 years to 60 years. 55.7% of the respondents were graduate and 44.3% of the respondents were postgraduate. 62.7% of the respondents were student, 23.9% of the respondents were salaried, 10.4% of the respondents were businessperson and 3% of the respondents were homemakers. 53.2% of the respondents have an annual income of less than 5 LPA, 21.9 % of the respondents have an annual income of 5 LPA to 10 LPA and 24.9 % of the respondents have an annual income of 11 LPA to 20 LPA.

Measures

Measurement scale used for the research is as per the previous research studies conducted and consisted of 16 items. The scale used consisted of 4 factors: customer trust, customer perceived value, customer satisfaction and customer loyalty. Customer trust is a unidimensional construct consisting of 4 items adapted from (Sun & Lin, 2010). Customer perceived value is a unidimensional construct consisting of 3 items adapted from (Ryu et al. 2008). Customer satisfaction is a unidimensional construct consisting of 5 items adapted from (Chen, 2008; Chen & Chen, 2010; Cong, 2016; Cong & Dam, 2017; De Rojas & Camarero, 2008; Bhattacherjee, A., 2001). Customer loyalty is a unidimensional construct consisting of 4 items adapted from (Zeithaml et al, 1996). All questions were measured using a 5-point scale ranging from strongly disagree (1) to strongly agree (5).

Results

Reliability and Validity tests

The skewness and kurtosis values are checked for normality (Kim, 2013). The skewness values range from -0.438 to 1.842 and the kurtosis values range from -1.228 to 3.588. For normality the values of skewness and kurtosis are near zero in Figure 2.

Figure 2 The Tested Model

From the SEM test analysis: SRMR value is 0.096, SRMR value less than 0.10 or of 0.08 (Hu & Bentler, 1999) is considered a good fit (Henseler et al. 2015); NFI value is 0.825, NFI results in values between 0 and 1. The closer the NFI to 1, the better the fit (Lohmöller, 1989); rho A ranges from 0.696 to 0.978; rms theta value is 0.195, the rms theta measure should be close to zero to indicate good model fit (Henseler et al, 2015; Lohmöller, 1989). The r square value of customer perceived value is 0.279, customer satisfaction is 0.431 and brand loyalty is 0.399. Therefore, the model seems to be a good fit.

From Table 1, the Cronbach’s alpha values of the individual parameters were between to 0.685 to 0.977. Cronbach alpha value of 0.7 and above is an indicator of high reliability (Nunally, 1978). The composite reliability (CR) was in the range of 0.807 to 0.985 higher than 0.6 (Hair, et al. 2010). The average variance extracted (AVE) ranged from 0.512 to 0.956 higher than 0.5. This supports the convergent validity.

Table 2, shows that all squared correlations were less than the variances extracted by each construct, supporting the discriminant validity.

Hypothesis Testing

This complies with the discriminant validity requirements in Table 3.

Indirect Effects

Discussion

The SEM analysis results are shown in Table 4. The path analysis shows that customer trust has a positive influence on customer perceived value. Trust increases customer expectations and commitment from the brand (Goodfriend & King, 1997; Morgan & Hunt, 1994). Trust thereby builds up confidence which increases the overall perceived customer value. The brand value increases and helps in development of positive relationship.

Customer Trust has a positive influence on customer satisfaction. Trust strengthens brand relationship with the customer. The reason is that trust is able to overcome all vulnerabilities and helps in development of positive relationship between the service provider and the customer (Rousseau et al. 1998). For maximizing customer satisfaction, it is essential to develop positive trust factor in the brand relationship.

Customer trust do not have a positive influence on brand loyalty. Trust is essential for development and enhancement of positive relationship and thereby increasing satisfaction. But the positive relationship may not always end up in developing loyalty. The value of the transaction has to be high in order to make loyal customers and spread good word of mouth.

Customer perceived value has a positive influence on customer satisfaction. Customers choose the offer that they believe has the capability to deliver the highest value (Kotler & Keller, 2016). The higher the perceived value the higher is the satisfaction level.

Customer perceived value has a positive influence on brand loyalty. A valuable offer bought gives satisfaction to the customer. The customer remembers the service experience for a long time. This experience helps the customer for the decision making while repurchase and also product recommendation. A good deal is always cherished on and is remembered by the customer. This helps in building brand loyalty.

Customer satisfaction has a positive influence on brand loyalty.  Customer satisfaction leads to loyalty (Bigne ́et al., 2005; Yoon & Uysal, 2005). A satisfied customer goes for repurchase and increases the profitability of the brand. Customer satisfaction influences brand loyalty and helps spread positive WOM (Gogoi, 2021). It is crucial to measure the satisfaction level of customers in order to have a big pool of loyal customers.

From Table 4, the indirect effects Customer Satisfaction -> Brand Loyalty and Customer Perceived Value -> Brand Loyalty are significant which shows full mediation. Customer satisfaction fully mediates the relationship between customer trust and brand loyalty and customer perceived value and brand loyalty.

Conclusion

The research shows that building trust in customers is crucial for an overall profitability in the long run. Trust helps in enhancing the customer perceived value and influence the satisfaction level. Customer satisfaction helps in creating brand loyalty.

Limitations

The sample size is small and majority of the respondents fall in the age group below 40 years. A better understanding of respondents above 40 years will provide a better view of the study.

Business Implications

Building trust is very crucial for marketer to survive in turbulent times and in crisis. A customer usually will prefer to buy a brand that is reliable. A customer will trust a brand if it provides value that is worth the purchase. The Covid19 crisis has taught the customers to be more conscious while purchasing any product or service. This has made the marketer to be more vigilant on the quality of the product and services they offer. The brand strategies are seen to be changing to cater to the consumer requirements. Marketers need to focus more on customer satisfaction and building relationship which will build up the trust in customers.

Appendix

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