Mediation role of customer advocacy in customer loyalty and brand equity relationship-an empirical study in context to in-store brands

Abstract

Objectives: Brand equity and purchase decisions are considered as the key determinants of consumer behaviour. The objective of this study was to examine the role of loyal consumers in strengthening brand equity of In-store brands. Statistical Analysis: The method adapted to study the objectives is a cross sectional study. Th study was carried out by self-administered questionnaire developed based on Likert scale. The survey was carried out at organised retail outlets in Bangalore city from 258 customers by following convenience sampling technique. PLS-SEM was used to analyse the data. Cronbach's Alpha was obtained to determine the reliability of the instrument. Further, convergent and discriminant validities were established to know the measures of relationship existing. Sobel's test was employed to test the mediation effect of customer advocacy between the relationship of customer loyalty and brand equity. Findings: From the results obtained it is observed that all AVE values obtained are greater than 0.5 i.e., Brand Equity (BE) is 0.7788, Brand Loyalty (BL) is 0.7863 and Customer Advocacy (CA) is 0.797, thus confirming the convergent validity of the constructs chosen. Further it is also observed that each construct chosen is distinct and different from the other constructs in the model. All the factor loadings of given construct are greater than corresponding cross loadings thus confirming the discriminant validity. The results of Sobel's test indicate that the impact of brand loyalty on brand equity is greater with the mediation effect of customer advocacy (Sobel test statistic t-values=3.627) than the direct effect of brand loyalty on brand equity (Sobel test statistic t-values=3.068). Thus we can clearly state that the relationship between Brand loyalty and Brand Equity can be best explained through Customer Advocacy. Both brand loyalty and customer advocacy have accounted for 60% of variance in brand equity, wherein brand loyalty has accounted for 45.3% of variance in customer advocacy. The findings of this study can be a reference for retailers to strategize their decisions with respect to in-store brands by laying more emphasize on customer advocacy. Application/Improvements: The outcomes reflect the positive influence of consumer advocacy on brand equity, by which the brand owners can strategize their moves towards enhancing brand equity by motivating advocacy of brands by the loyal customers to prospects, thus reducing excessive promotional costs by the brand owners.