MSC Thesis

Department of Marketing and Statistics Master Thesis, Final Semester
Authors:
Linna Pillossof Felix Nickel
Supervisor:
Athanasios Krystallis
Service Branding from the Consumer's Point of View
An examination of the effects of service brand dimensions on brand loyalty

Master Thesis
Master of Science in Marketing
Aarhus School of Business August 2009
Abstract
ABSTRACT
During the last couple of decades, brands have become an increasingly important part in companies marketing strategy due to the fact that they are seen as valuable assets and a primary source of differentiation. In this sense, many academics have developed theoretical models that help to understand the relationship between consumers and their brands. However, these frameworks predominantly conceptualized brands in terms of physical products whereas research in the field of service branding has almost been neglected throughout the past years. Given the fact that consumers nowadays spend more money for services than for packaged goods, this lack of academic interest is particularly inadequate. Moreover, the inherent differences in the marketing principles of products and services may well question the relevance of the existing branding models application within a service setting and thus demand further investigation. Taking these limitations into consideration, the underlying study intended to help service marketers and managers to capitalize on the value of branding by examining how consumers evaluate and respond to service brands. A critical literature review resulted in the development of the Service Brand Loyalty model that hypothesized several relationships between key brand dimensions and consumer response variables such as brand attitude and loyalty. Seeking customer-based information, the model has then been estimated for the airline industry with a sample of Danish university students in order to investigate the strength and significance of the proposed effects. Overall, the results revealed that the price, core service, feelings and self-image congruence are the most important dimensions of a service brand which, in turn, significantly impact on consumers satisfaction, brand attitude and brand loyalty. Except price, all of these attributes are intangible components of the service brand to the extent that they can only be assesses by the consumer during the consumption stage of decision-making. This strongly confirmed the experiential nature of services and thus highlights the fact that brand dimensions might significantly differ between services and physical goods. Besides these brand components, a companys controlled communications (e.g. advertising, promotions) were also found to strongly influence customers overall dispositions and behaviors toward the brand. Word-
Abstract
of-mouth communications and publicity turned out not to impact on consumers brand evaluation and response. Although the literature has suggested several moderation effects related to a customers degree of brand familiarity and service involvement, these effects were not supported by the underlying study. Overall, the results of this thesis confirmed previous research in the field of service branding and the findings thus significantly contribute to our understanding of the way in which consumers makes sense of and behave towards service brands. As such, these results might serve as an important source of information for service marketers in order to assist them in capitalizing on the value of a brand.
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Table of Contents
TABLE OF CONTENTS
Abstract Table of Contents List of Figures List of Tables Part One: Introduction 1. INTRODUCTION ..............................................................................................................1 1.1. Problem Statement & Research Questions .................................................................2 1.2. Methodology & Delimitation......................................................................................5 1.3. Structure of the Thesis ................................................................................................7 Part Two: Literature Review 2. THE PRINCIPLES OF BRANDING.................................................................................9 2.1. The Value of Brands ...................................................................................................9 2.2. Brand Evaluation & Consumer Response ................................................................10 3. SERVICE MARKETING & BRANDING ......................................................................14 3.1. Service Marketing.....................................................................................................14 3.1.1. Differences between Goods and Services.........................................................14 3.1.2. Services vs. Goods Marketing ..........................................................................18 3.2. Service Branding.......................................................................................................22 3.2.1. The Importance of Service Brands....................................................................23 3.2.2. Service Brand Dimensions................................................................................24 3.2.3. Service Branding Models..................................................................................28 3.3. The Service Brand Loyalty (SBL) Model.................................................................33 3.3.1. Brand Loyalty ...................................................................................................34 3.3.2. Brand Attitude...................................................................................................35 3.3.3. Satisfaction........................................................................................................35 3.3.4. Brand Evidence .................................................................................................36 3.3.5. Brand Hearsay...................................................................................................37 4. THE EFFECTS OF MODERATING VARIABLES .......................................................39 4.1. Brand Familiarity......................................................................................................39 4.2. Consumer Involvement.............................................................................................41
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Table of Contents
Part Three: Methodology 5. METHODOLOGY ...........................................................................................................43 5.1. Research Approach & Sample..................................................................................43 5.2. Brand Stimuli............................................................................................................44 5.3. Questionnaire Design................................................................................................45 5.4. Measures ...................................................................................................................46 5.5. Model Specification..................................................................................................51 5.6. Model Estimation & Analysis...................................................................................53 5.7. Data Collection .........................................................................................................55 Part Four: Analysis & Discussion of Research Findings 6. ANALYSIS & DISCUSSION OF RESEARCH FINDINGS ..........................................56 6.1. Sample Characteristics..............................................................................................56 6.2. PLS Results...............................................................................................................57 6.2.1. Measurement Model Results.............................................................................58 6.2.2. Structural Model Results...................................................................................63 6.3. Discussion of Findings..............................................................................................65 6.4. The Effects of Brand Familiarity & Consumer Involvement ...................................69 Part Five: Conclusion 7. CONCLUSION ................................................................................................................74 7.1. Limitations & Further Research ...............................................................................74 7.2. Conclusion ................................................................................................................76
Bibliography........................................................................................................................79 Appendix..............................................................................................................................89
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List of Figures
LIST OF FIGURES
Part One: Introduction Fig. 1.1: Structure of the Thesis .............................................................................................8
Part Two: Literature Review Fig. 2.1: The Double Vortex Brand Model ..........................................................................11 Fig. 2.2: The Brand Knowledge Construct...........................................................................12
Fig. 3.1: The Goods-Services Continuum ............................................................................17 Fig. 3.2: Key Dimensions for Branded Products and Services ............................................26 Fig. 3.3: The Service Brand Equity Model...........................................................................29 Fig. 3.4: The Service Brand Verdict Model .........................................................................32 Fig. 3.5: The Service Brand Loyalty Model .........................................................................33
Part Four: Analysis & Discussion of Research Findings Fig. 6.1: SBL Model with PLS Results ................................................................................64 Fig. 6.2: SBL Model Results for the Low Involvement Sample ..........................................71 Fig. 6.3: SBL Model Results for the Low Familiarity Sample.............................................73
List of Tables
LIST OF TABLES
Part Two: Literature Review Table 3.1: Determinant of Service Quality........................................................................... 20 Table 3.2: Brand Dimensions of Services ............................................................................ 27 Table 3.3: Comparison of Brand Dimension........................................................................ 31 Table 3.4: Definitions of the Key Constructs of the SBL Model ......................................... 34
Part Three: Methodology Table 5.1: Summary of Construct Measures ........................................................................ 47 Table 5.2: Construct Measures used in the Online Survey................................................... 49
Part Four: Analysis & Discussion of Research Findings Table 6.1: Sample Characteristics ........................................................................................ 57 Table 6.2: Convergent Validity and Reliability.................................................................... 59 Table 6.3: Discriminant Validity.......................................................................................... 60 Table 6.4: Weights for Formative Dimensions of Brand Evidence and Hearsay................. 63 Table 6.5: Results of the Structural Model........................................................................... 63 Table 6.6: Total Effects in the SBL Model .......................................................................... 65 Table 6.7: Brand Familiarity and Consumer Involvement ................................................... 69 Table 6.8: Weights for Formative Dimensions Low Involvement Sample....................... 72
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Part One: Introduction
1. INTRODUCTION
Brands play an integral part in todays consumer markets due to their capability of providing value for both the customer and the firm. From the consumers perspective, a brand is seen as a purveyor of advantages (OCass & Grace, 2003, p.452) that not only communicates the source of the offering (Aaker, 1991; 1996) but also signals quality and reduces search costs and the risk of transactions (Davis et al., 2000; Janiszewski & van Osselaer, 2000; Keller, 1998). For the firm, strong brands have been described as one of the most valuable assets which serve as a primary source of differentiation (Grace & OCass, 2005a). As such, a powerful brand may enable an organization to gain a sustainable competitive advantage that leads to long-term profitability based on increased market share, reduced marketing costs, positive word-of-mouth and price premiums charged (Aaker, 1996; Chaudhuri & Holbrook, 2001; Jacoby & Chestnut, 1978). As a result of the increasing competition that characterizes nowadays global markets, most companies have been encouraged to shift their strategic focus towards customer satisfaction and retention (Berry, 1993 in Jones et al., 2000) which were highlighted as key principles by the recently emerging marketing disciplines of Total Quality Management (TQM) and Customer Relationship Management (CRM). In this respect, branding is considered to be one of the prime mechanisms that allow organizations to establish such mutually beneficial and trusting long-term relationships with their customers as suggested by these new business orientations (Fournier, 1998; Keller, 1993). As a consequence, branding in its very essence must be regarded as a process that creates superior customer value which, in turn, satisfies consumers and keeps them coming back (Aaker, 1991; de Chernatony & McDonald, 1992 in Moss et al., 2008). When referring to the brand level, it is thus not surprising that the concept of brand equity has evolved as a business priority during the last couple of years (Grace & OCass, 2002) due to its crucial role in linking the effects of brand loyalty to firm profitability (Aaker, 1996; Chaudhuri & Holbrook, 2001; Chen & Chang, 2008; Yoo et al., 2000).
While brand equity is often understood as a two-dimensional construct consisting of both consumer perception and behavior (Chen & Chang, 2008), most of the existing work in the field of branding has mainly considered consumers brand evaluations without explicitly modeling its relations to consumer response variables. However, in order to benefit from and capitalize on branding, marketers and managers not only need to understand how consumers form brand associations and which brand dimensions hold meaning to them (OCass & Grace, 2004). Even more critical is an understanding of how consumers react and respond to brands (de Chernatony & DallOlmo Riley, 1998). Furthermore, many of the previously developed branding models that intended to simplify the complex customer-brand relationship (e.g. Berry, 2000) still seem to lack empirical validation while at the same time almost exclusively conceptualizing brands in terms of physical goods (de Chernatony & DallOlmo Riley, 1999; Grace & OCass, 2005a; Turley & Moore, 1995). Neglecting the potential differences in the branding principles between product and service brands seems to be a major limitation given the fact that todays Western economies are mainly dominated by service industries (Clifton & Maughan, 2000; Martin, 1999). In addition, the fundamental marketing principles between products and services differ to a large extent and hence the application of existing branding frameworks in a service setting may well be doubted (Berry, 2000; Grace & OCass, 2005a). Therefore, this thesis will take account of the limitations of previous work in the field of consumer branding by validating and proposing a cause-and-effect Service Brand Loyalty model (SBL) that will investigate and explain how service consumers evaluate and respond to service brands. In doing so, this research will provide new theoretical input to the academic community on the topic of service branding as well as it will offer practical guidelines to marketers and managers in order to benefit from branding in the service industry.
1.1. Problem Statement & Research Questions The reason why brands are becoming increasingly important in companies current marketing strategies lies in the fact that brands are seen as valuable assets and a major basis for differentiation (Grace & OCass, 2005a; OCass & Grace, 2003). Consequently, strong brands may serve as a source of competitive advantage that can result in a firms long-term
profitability (Aaker, 1996; de Pelsmacker et al., 2007). However, brands also provide value to the consumer (Grace & OCass, 2005a) and, in essence, can be considered as a promise of future satisfaction (Berry, 2000, p.129). In this respect, many academics have developed theoretical models that help us to understand how consumers evaluate and behave towards brands (e.g. Berry, 2000; de Chernatony & DallOlmo Riley, 1998; Keller, 1993; 1998). However, these frameworks primarily concentrated on brands in terms of physical products and goods while research in the field of service branding has almost been neglected throughout the past years (de Chernatony & DallOlmo Riley, 1999; Turley & Moore, 1995). This lack of academic interest is especially inadequate if we consider that, nowadays, most Western economies are increasingly being dominated by service industries (Clifton & Maughan, 2000; Martin, 1999). Moreover, the importance of branding in the service sector has been highlighted by several authors (e.g. Arora & Stoner, 1996; Berry, 2000; McDonald et al., 2001) stressing that branding also serves as a key success factor for service organizations and that it must be seen as a cornerstone of services marketing in the twenty-first century (Berry, 2000, p.128). Due to its specific characteristics, some academics even ascribe a higher importance to branding in the service industry as compared to traditional goods markets (McDonald et al., 2001; Onkvisit & Shaw, 1989 in Turley & Moore, 1995). In a similar way, the essential and inherent differences in the marketing principles underlying goods and services may well question the relevance of existing branding models application in a service setting and thus demand further investigation (Bateson, 1995a; Berry, 1980; 2000; Grace & OCass, 2005a). For instance, the distinct features of services such as intangibility, perishability, heterogeneity and simultaneity (Iacobucci, 1998; van Riel et al., 2001) have resulted in a widespread belief amongst academics that consumers evaluation of service brands might differ in both kind and degree from physical products and may thus require new theoretical approaches (Berry, 2000; de Chernatony & DallOlmo Riley, 1998; 1999; Gabbott & Hogg, 1994; Stuart, 1997 in McDonald et al., 2001; Zeithaml, 1981 in Gabbott & Hogg, 1999; Zeithaml et al., 1985). In this respect, Grace and OCass (2002) as well as Tax and Stuart (1997 in OCass & Grace, 2004) explicitly state that the brand dimensions which hold meaning to the consumer are expected to be different between goods and services.
Besides the limitations of conceptualizing brands mainly in terms of physical products (e.g. Aaker, 1996; Keller, 1993; 1998), the existing branding models demonstrate significant weaknesses caused by their absence of empirical testing and their lack of validation from the consumers point of view (Grace & OCass, 2002; 2005a). While, for example, de Chernatony and DallOlmo Riley (1998) investigated service branding based on a qualitative study with marketers and brand experts, their proposed framework fails to consider the end users perspective. Although it might be brand managers or practitioners who create and develop a brand in the first place, the prominent marketing literature clearly suggests that it is the consumer who ultimately evaluates and responds to a brand and consequently determines its success (Arora & Stoner, 1996; Friedman & Smith, 1993; OCass & Grace, 2004). Likewise, the service brand equity model developed by Berry (2000) has helped our understanding by simplifying brand complexity into a manageable number of elements, however, the focal constructs and their interrelationships have so far never been empirically tested. In order to cope with these limitations, Grace and OCass (2005a) recently developed a theoretical framework to explain how consumers evaluate as well as respond to service brands by examining the effects between various service brand dimensions and customers repurchase intentions. While the relationships between the constructs in their Service Brand Verdict (SBV) model have been validated by consumer research, their findings have until now only been tested for two specific service settings, namely retail stores and banking services.
Due to the scarcity of its application, further exploration and validation of their proposed model is required not only to test the results generalizability to other service settings but also to suggest possible modifications. Since services themselves are expected to vary to a large extent, several authors have emphasized the need to examine the potential differences in the relationships among key constructs for brands in new service environments (Grace & OCass, 2005b; OCass & Grace, 2004). Moreover, from a managerial perspective it has become apparent that in order to capitalize on the value of banding, research has to address both the dimensions which are relevant to customers when evaluating service brands as well as their effects on consumers response. When referring to the latter point, the concept
of customer loyalty has received broad attention especially in the service industries because it is frequently seen as the ultimate determinant for a successful and profitable business (Caruana, 2002; Juhl et al., 2002). Another major issue that needs to be taken into consideration by the underlying research is the possible moderating role of various personality characteristics which are inherent to certain consumer segments. In this respect, Brodie et al. (2009) and de Chernatony and DallOlmo Riley (1998) claim that variables such as the degree of customer familiarity or involvement might impact on the relative importance of various aspects of service branding.
Taking account of the previously-mentioned limitations and the subsequent argumentation, the main objective of this thesis is to critically investigate the effects of service brand dimensions on consumers brand loyalty. More specifically, the overall objective will be achieved by addressing the following research questions:
What are the dimensions of service brands that are meaningful to consumers when evaluating branded services and how important are they?
How do service brand dimensions affect consumers brand loyalty?
How are other consumer response variables such as customer satisfaction and brand attitude related to service brand loyalty?
To what extent might the effects differ between certain consumer segments based on personality characteristics such as band familiarity and customer involvement?
1.2. Methodology & Delimitation Overall, the methodological approach of this thesis will follow the guidelines of theory elaboration which include applying and extending existing theory into new settings or contexts (Lee, 1999). In order to answer the underlying research questions, a two-fold approach will be applied. In the first part, an extensive literature review will be conducted by examining theories, frameworks and models relevant to the topic. In this respect, the
research will primarily highlight literature on services marketing and service branding while additionally drawing the link to those fundamental consumer response variables that are at the core of this thesis. Furthermore, previous studies in the field of service branding will be investigated and critically analyzed. Due to lack of existing research and the scarcity of theoretical understanding in the service branding arena, specific focus will be put on the earlier work by Grace and OCass (2005a) in order to propose a slightly modified cause-and-effect Service Brand Loyalty (SBL) model. In the second part, a quantitative research approach will be applied to empirically test and validate this SBL model by means of structural equation modeling (SEM). As mentioned previously, consumers are at the heart of marketing (Friedman & Smith, 1993) and thus any branding framework that intends to be of practical relevance to service marketers needs to be estimated on the basis of actual customer information. Therefore, an online survey amongst Danish university students was conducted in order to obtain data from brand users with first-hand experience. Moreover, the focus of this research will be on one key tourism service, namely the transportation service provided by airlines. This decision is based on both the growing importance of the tourism industry and the fact that consumers in previous studies revealed to strongly recall this particular service when being asked to think about service brands (OCass & Grace, 2003). As such, this thesis will investigate the effects of service brand dimensions in a new service setting and hence be of academic as well as practical relevance and interest. The findings will provide additional theoretical knowledge to the academic community while at the same time being of high importance to service marketers and managers, especially in the airline industry, by offering guidelines on how to better manage and communicate service brands in order to ultimately benefit from loyal customers.
Although every effort was taken to design a valid and reliable study, there are nevertheless certain constraints which result in the delimitation of some minor methodological aspects. As a consequence, the lack of research in field of service branding as well as the partly explorative nature of this study will shift the emphasis of the SBL models estimation on the prediction of relationships rather than the mere confirmation of a-priori specified structures. Furthermore, this thesis will only investigate one specific
service industry (i.e. airlines) and might thus inevitably pose some limitations on the studys external validity which refers to the generalizability of the findings to the service sector as a whole. Yet, this research still has the potential to compare the results with those of previous studies on the topic of service branding as well as it could highlight brand dimensions that are unique to consumers when evaluating and responding to airline services. Another limitation underlying this thesis is the use of a student sample for model validation. However, while not being a fully representative sample, students are nonetheless considered to be a prime target group of todays airline companies who are also expected to possess varying degrees of product knowledge and experience which, in turn, make them a suitable sample to address the underlying research questions. In a similar way, many academics have claimed that it is not only common practice to use students for consumer studies (e.g. Arora & Stoner, 1996) but that it might even be beneficial to employ such maximally homogeneous samples for theory-testing research (Calder et al., 1981 in Warrington & Shim, 2000).
1.3. Structure of the Thesis The overall structure of this thesis is illustrated in Figure 1 and will serve as an orientation to the reader by providing an overview of the subsequent chapters. So far, Part One has introduced the topic of this research as well as it has provided the rationale for conducting the underlying study. In addition, the thesis overall objective and the respective research questions have been formulated before an outline of the methodological approach was offered. The literature review in Part Two will present the theoretical underpinnings of this study and is basically divided into three chapters. While the first section primarily addresses the fundamental principles of branding by linking existing branding models to various consumer response variables, the second section will shift the focus to the arena of services marketing. In this respect, the different marketing imperatives for goods and services will be discussed before the existing work in the field of service branding will be highlighted. Finally, the studys underlying Service Brand Loyalty (SBL) model will be conceptualized and explained. Having proposed the potential moderating effects of brand
familiarity and consumer involvement in the third section, the literature review ends with the formulation of several research hypotheses. Part Three will present and justify the methodology that was followed within this thesis. More specifically, it will address issues such as sampling procedure, questionnaire development and data collection. This part will also draw attention to the methodological specification of the SBL model as well as the measurement of the focal constructs. The analysis and discussion of the research findings is then provided in Part Four. Both the measurement and the structural model of the SBL framework will be validated and the relationships between its constructs are presented. Similarly, this section will test the underlying research hypotheses and thus highlight the implications of the studys findings. Finally, the thesis will conclude with Part Five by summarizing the key aspects of the research. As such, the last chapter will also offer several recommendations and practical guidelines to service marketers. Furthermore, the main limitations of this thesis will be discussed and some comments about future research are provided.
Fig. 1.1: Structure of the Thesis

Part One: Introduction Problem Statement Research Questions
Delimitation
Part Two: Literature Review Branding Principles Service Marketing & Branding Moderating Variables
Research Hypotheses Part Three: Methodology Construct Measurement Model Specification
Research Approach
Part Four: Analysis & Discussion of Research Findings Model Estimation Testing Hypotheses Implications
Part Five: Conclusion Recommendations Limitations Future Research
Part Two: Literature Review
2. THE PRINCIPLES OF BRANDING

As the first part of the literature review, this chapter will serve as an introduction to the fundamental principles of branding by outlining what brands are and why they are becoming so increasingly valuable in todays consumer markets. More specifically, this section will emphasize the importance to consider the customers perspective when trying to understand how branding ultimately works. In this respect, two essential branding models are discussed in order to explain the way in which individuals evaluate and make sense of brands before the brand loyalty construct is highlighted as a key consumer response variable.
2.1. The Value of Brands According to the American Marketing Association (AMA), a brand is defined as a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of a competitor (de Pelsmacker et al., 2007, p.40). While a brand might initially start its life with nothing more than a distinctive name, over time it is getting recognized by consumers for its functional capabilities and ultimately develops into a shorthand notation that is associated with several unique values (de Chernatony & DallOlmo Riley, 1998). As such, a brand is argued to be one of the most essential concepts in the world of marketing due to its ability to create a perception of superiority in consumers minds (Levine, 2003). From a customers point of view, brands are seen as purveyors of advantages in terms of both economic and symbolic values (OCass & Grace, 2003) In this respect, brands not only serve as a rich source of information which might signal the quality of a product and reduce consumers search costs and risks of transaction (Biswas, 1992; Janiszewski & van Osselaer, 2000) but they might furthermore act as a symbol that directs meaning to the consumer and hence represents a form of promise regarding future purchases (Keller, 1998). On the other hand, brands have also become an integral part in most companies marketing strategies since they are increasingly understood as valuable assets and a major source of competitive advantage (OCass & Grace, 2003; Skinner, 1990 in Grace & OCass, 2002).
In that case, branding has been highlighted as a mechanism to engage both buyer and seller in long-term trusting relationships (Fournier, 1998; Keller, 1993) and a process of creating value which, in turn, will satisfy customers and ultimately keep them coming back (Aaker, 1991). Moreover, strong brands might even play a more significant role in a consumers decision-making process than the perceived quality of the product or service per se (Arora & Stoner, 1996).
2.2. Brand Evaluation and Consumer Response It is a common assumption that brands differentiate themselves based on the fact that they excel on particular aspects and hence there has been a growing interest by managers and marketers to understand the components of a brand and how these are perceived by consumers (de Chernatony & DallOlmo Riley, 1998). As an extension of their earlier proposed atomic brand model, de Chernatony and DallOlmo Riley (1998) therefore developed their Double Vortex Brand Model (Fig. 2.1) in an attempt to illustrate the process by which customers perceive and, as a consequence, behave towards brands. Their framework has been validated by extensive interviews with brand consultants and practitioners who generally assumed a brand to consist of both functional capabilities (i.e. tangible, rationally assessed performance) as well as symbolic features (i.e. intangible, emotionally assessed values). Overall, the model addresses branding from the perspective of both the organization (left vortex) and the end consumer (right vortex) indicating that brands are originally created by a firm. As such, a companys inherent mission and values are expected to strongly shape a brands development. However, while managers and marketers consider a brand to encompass various interrelated elements (e.g. band as legal protection, brand as risk reducer), de Chernatony and DallOlmo Riley (1998) stress that a brand is ultimately perceived and made sense of in the consumers minds by assessing a product based on the confidence they have in the specific brand being the right choice (i.e. consumers as benefit seekers). These confidence evaluations, in turn, are not only believed to be derived from a brands rational (e.g. price-performance characteristics) and emotional (e.g. psychological and social benefits) dimensions but their importance is also supposed to differ among certain types of products and with varying degrees of consumers previous experiences.
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Fig. 2.1: The Double Vortex Brand Model
(Source: Adapted from de Chernatony & DallOlmo Riley, 1998)
Although brands might initially be created and developed by an organization, it is often believed that a brand primarily rests and exists within a consumers mind (Grace & OCass, 2002). As a consequence, marketers and managers who aim to succeed in branding not only need to understand how consumers make sense of a brand and how they formulate brand images and associations but, more importantly, to what extent specific brand associations might influence their ultimate attitudes and behaviors (OCass & Grace, 2003). In this respect, Keller (1993; 1998) tried to model the entire brand knowledge construct (Fig. 2.2) from the customers perspective in order to explain how consumers evaluate and respond to brands. In his view, a customers brand knowledge is basically comprised of two components, namely brand awareness and brand image. While the former merely refers to a consumers familiarity with and awareness of an offering, the latter has been ascribed a more important position and is related to a persons overall perception or mental picture of the brand (Keller, 1993). As such, a brands image must be understood in terms of customers brand associations which are defined as anything linked to a brand in memory (Aaker, 1991, p.109) and which can be formed from consumers own direct experience with the brand (e.g. purchase, consumption) or via the image portrayed through
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a variety of marketer-controlled and uncontrolled communications (e.g. advertising, wordof-mouth). Within Kellers (1998) brand knowledge framework, these brand associations are mainly modeled in the form of various product and non product-related attributes thus highlighting the fact that a customers evaluation of a branded offering is based on his/her perception of specific brand dimensions. Whereas product-related attributes represent components of the core product function, other dimensions such as price, feelings and user imagery (i.e. perception of the typical user of the product) are specified as external or non product-related attributes.
Fig. 2.2: The Brand Knowledge Construct
(Source: Adapted from Keller, 1998)
In order to explain how brand associations ultimately influence consumers behavior, Keller (1993; 1998) linked a customers overall brand knowledge with the concept of brand equity. Defined as the differential effect of brand knowledge on consumer response to the marketing of the brand, brand equity requires customers to be aware of and familiar with the offering (brand awareness) and to hold favorable, strong and unique brand associations (brand image). As such, brand equity might similarly be understood as a products extra value embedded in its brand name (Yoo et al., 2000). However, besides merely consisting
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of consumers brand perceptions in the form of brand awareness and associations, Aaker (1996) and Chen and Chang (2008) emphasize customer behavior as another key dimension of customer-based brand equity based on the fact that brand attitudes and loyalty (purchase intentions) have often been used as surrogates of this concept. In this respect, brand loyalty has been referred to as a consumers deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior (Oliver, 1999, p. 34) and it was found to be most strongly related to brand equity (Yoo et al., 2000). Based on this definition, brand loyalty is not only considered to consist of customers repeated brand purchases (behavioral loyalty) but also to include a consumers dispositional commitment (attitudinal loyalty) toward a brand in terms of certain unique values associated with the offering (Aaker, 1991; Chaudhuri & Holbrook, 2001). This is also in accordance with the conceptualization of Keller (1998) who modeled customers attitudes as specific forms of brand associations which, in turn, affect brand equity. Overall, it can thus be noted that brand loyalty and brand attitude are significant consumer response variables which might lead to superior brand performance outcomes such as greater market shares, favorable word-of-mouth, repeat sales and customers willingness to pay premium prices by being mediated through brand equity (Aaker, 1996; Chaudhuri & Holbrook, 2001).
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3. SERVICE MARKETING & BRANDING

Having introduced and discussed the fundamental branding principles and their relation to key consumer response variables, the second section of the literature review will now focus on the topic of service marketing which is at the heart of this thesis. Based on the growing importance of todays service industry, we will first point to the vital differences between goods and services before its effects on the essential marketing approaches for services are highlighted. In a second step, the key issues in the field of service branding will be emphasized by considering previously developed frameworks and by exploring those kinds of brand dimensions that are crucial for the evaluation of branded services. Finally, the Service Brand Loyalty (SBL) model underlying the empirical investigation of this study will be conceptualized and discussed.
3.1. Service Marketing During the last couple of decades, especially the more developed economies have witnessed the explosive emergence of the service sector (Martin, 1999). Based on this development, most of the Western states are increasingly being dominated by service industries which, in turn, has resulted in consumers now spending more for services than for physical goods (Clifton & Maughan, 2000; Martin, 1999). However, both academics and marketers have realized that these two types of offerings differ to a large extent and, as a consequence, a widespread belief has evolved that much of the traditional wisdom in consumer goods marketing simply does not fit the service situation (Friedman & Smith, 1993, p.60). Due to these fundamental differences between services and goods, the focus of much research has been directed towards the challenges faced by todays service firms (Martin, 1999).
3.1.1. Differences between Goods and Services Several authors have identified differences in the characteristics of goods and services which are expected to significantly impact on the marketing approaches followed by service marketers and practitioners (e.g. Iacobucci, 1998; Hartman & Lindgren, 1993;
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Parasuraman et al., 1985; Zeithaml et al., 1985) and on the way consumers respond to and evaluate them (e.g. Gabbott & Hogg, 1994; Zeithaml, 1981 in Gabbott & Hogg, 1999). In this regard, four unique and commonly accepted features of services have been proposed by the prominent marketing literature which are frequently referred to as intangibility, heterogeneity, simultaneity/inseparability and perishability (Zeithaml et al., 1985). Intangibility is often viewed as the most fundamental difference between physical products and experiential services (Hartman & Lindgren, 1993). In most cases, services are described as being intangible because their output is considered to be an activity rather than a tangible object (Johns, 1999). Compared to traditional goods, services also provide consumers with fewer tangible cues and, as such, their relative intangible nature makes it difficult or even impossible to properly inspect and evaluate their quality prior to purchase (Parasuraman et al., 1985; van Riel et al., 2001). Furthermore, it needs to be noted that the intangibility of services poses problems to both the customer and the firm. For instance, the fact that services cannot be seen, touched or tasted might result in difficulties for consumers to understand what they will ultimately receive for their money while service marketers at the same time have to face the challenge of trying to demonstrate the value of their intangible offering which might be hard to assess before consumption (Martin, 1999). Heterogeneity refers to the variability of the service performance and is thus related to the difficulty of providing services with a constant quality (Berry, 1987). Due to the human element inherent in the service industry, a certain degree of inconsistency in the provision of services is unavoidable and consequently each service experience could be considered to be potentially unique (Berry, 1980; Zeithaml et al., 1985). Since service performance often varies from one purchase occasion to the next, services are commonly viewed as dynamic and experiential and consumers are therefore likely to reevaluate the quality criteria each time a service is purchased and consumed (Friedman & Smith, 1993; Parasuraman et al., 1985). The third key characteristic of services, termed simultaneity, is associated with the inseparability of production and consumption and represents another unique feature of the service sector (Zeithaml et al., 1985). In this respect, services, as compared to physical goods, merely exist on the basis of the interaction between the service provider and the consumer (Friedman & Smith, 1993) and since both parties are believed to jointly
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experience the offering (i.e. inseparability), the customer value within a service environment is often argued to be co-created (Brodie et al., 2009). As a result of this direct contact between the client and the employee, a services quality mainly occurs during the service delivery stage which inevitably leads to difficulties in adequately evaluating services until after they have been received (Martin, 1999). Perishability is the last of the four distinct service dimensions and is supposed to have the least effects on respective service marketing issues. Generally speaking, perishability implies that services cannot be stored and thus have to be produced on demand (Iacobucci, 1998). As such, the consequences of this service characteristic are expected to be similar to those of heterogeneity and simultaneity.
While most authors agree with regard to the above-mentioned unique service features, there has nevertheless been an ongoing debate about the practicability of distinguishing between goods and services. Shostack (1977 in de Chernatony & DallOlmo Riley, 1999), for example, believes that a simple services vs. goods classification might be dysfunctional based on the fact that service dimensions such as intangibility, perishability and heterogeneity are also present in several traditional product markets. Similarly, Gummesson (1994) and Johns (1999) state that a distinction between these two types of offerings is rather complicated since even the output of services often involves a substantial tangible component. In this respect, the value customers obtain from a service can be considered to consist of various elements of which some might be activities (e.g. a transportation service) while others are things (e.g. physical facilities). Due to this argumentation, it is frequently mentioned that both products and services should better be thought of as being located on a continuum which takes the varying degrees of tangibility or heterogeneity into account (Payne, 1993 in McDonald et al., 2001). Following these guidelines, Zeithaml (1981 in Friedman & Smith, 1993) proposed such a distinction between rather tangible products and intangible services based on the different attributes of these types of offerings and their resulting ease of evaluation (Fig. 3.1). In her view, most services differ from physical goods to the extent that they predominantly possess experience and credence qualities. Thus, services are argued to be high in performance properties which can only be judged after purchase or consumption
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(experience qualities) or which cannot be evaluated at all (credence qualities). On the contrary, most goods are dominated by search qualities which refer to those attributes a consumer can easily determine and assess prior to purchasing the product (Parasuraman et al., 1985). Overall, the conceptualization of Zeithamls goods-services continuum not only has the power to explain the differences between physical products and experiential services per se, but it also provides a means for discriminating among various types of services (Iacobucci & Ostrom, 1996). While a tourist, for instance, can come to a conclusion about the performance of his/her holiday trip at least once it is experienced firsthand during the actual vacation, a patient might find it extremely difficult to evaluate the quality of a doctors medical diagnosis (i.e. professional services) at all.
Fig. 3.1: The Goods-Services Continuum
(Source: Adapted from Zeithaml, 1981 in Friedman & Smith, 1993)
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3.1.2. Services vs. Goods Marketing When referring to the unique characteristics of services which were reviewed in the preceding section, several academics agree that, in its very essence, services are fundamentally different from goods and hence require distinct marketing approaches (Zeithaml et al., 1985). As a consequence, it is not surprising that much of the previous research has pointed to the existence of certain marketing issues and constructs which are particularly relevant for or even exclusive to the field of services marketing. Based on these findings, the most crucial marketing variables need to be highlighted and their effects on the marketing imperatives for a service setting must be discussed.
Taking the four distinct service features into consideration, Tax and Stuart (1997 in OCass & Grace, 2004) argue that the core offering for physical products differs to a large degree from that of services with respect to the inherent elements involved. This view is shared and even stressed by Martin (1999, p.325) who believes that a service, as compared to a conventional product, is not that simple to define since it also involves the appearance of the facilities, the behavior of employees, the presence of other customers, and the impressions made when customers come into contact with all these elements. As a result of such concerns, Booms and Bitner (1981 in Moorthi, 2002) reconsidered the 4 Ps of the traditional Marketing Mix (i.e. product, price, place and promotion) and eventually proposed a new 7 Ps approach for the marketing of services by including three new variables, namely physical evidence/facilities, process and people. Referring to the dimension of physical surroundings, Bitner (1992) introduced the concept of servicescapes due to its ability to influence individual behaviors (e.g. approach/attraction vs. avoidance) as well as the nature and quality of social interactions. By offering some of the few tangible and extrinsic cues that can be accessed before the actual purchase, consumers might rely on the appearance of physical facilities to infer beliefs about service quality and other service-related attributes (Bitner, 1992; Turley & Moore, 1995). Similar to the package of a product, the physical setting of a service firm can act as an overall visual representation and thus convey an image which might suggest the relative quality of the offered service as well as the capabilities of the provider (Solomon, 1985 in Bitner, 1992). Due to the simultaneity of production and consumption (i.e.
18
inseparability), consumers are often in the factory and experience the service offering within the firms facilities and, as a result, the effects of servicescapes are generally supposed to be more important in a service setting (Bitner, 1992). Moreover, previous research has shown that incorporating the physical environment into a service companys total offering has the potential to counteract the problems often associated with the intangibility of services (Hartman & Lindgren, 1993).
Both the process and people dimension that were added to the novel 7 Ps Services Marketing Mix are related to the overall concept of service quality which is of particular importance due to the fact that it is seen as almost identical to customer satisfaction within a service context (Caruana et al., 2000; Oliver, 1980 in Grace & OCass, 2005b). However, based on their unique characteristics such as simultaneity or intangibility, the quality of services is more difficult to evaluate than the quality of goods since consumers often find it hard to determine which service is the best at the point of purchase (Arora & Stoner, 1996; Parasuraman et al., 1985). Moreover, it has often been argued that service quality not only consists of tangible components but also of intangible and rather subjective dimensions (Tsaur et al., 2002). Accordingly, Friedman and Smith (1993) conclude from their study on service evaluations that service users mainly engage in post-purchase as compared to prepurchase assessments and hence ascribe a higher importance to experience attributes than to search qualities or rather tangible cues. The dominance of attributes that can only be judged by the consumer during or after consumption can also be seen in Parasuraman et al.s (1985) conceptualization of service quality (Table 3.1) in which only two of the ten quality determinants, namely tangibles (e.g. physical facilities or the appearance of employees) and credibility (e.g. company name), might be known prior to purchase. Similarly, such an experiential view of services is emphasized by Bateson (1995b) stating that both goods and services deliver a bundle of benefits but, that for services, these benefits are supposed to be created through its experience. When referring back to the process element of the Services Marketing Mix (Booms & Bitner, 1981 in Moorthi, 2002), many authors believe that service quality, as compared to product quality, must be understood as consisting of two distinct dimensions: outcome and process quality (Lehtinen & Lehtinen, 1982 in Caruana et al., 2000). Also sometimes
19
known as technical vs. functional quality (Gummesson, 1991 in Arora & Stoner, 1996) or performance vs. delivery quality (Grnroos, 1984 in Johns, 1999), the former usually describes the satisfaction with a services output while the latter is frequently associated with the process or experience of receiving a service (Arora & Stoner, 1996). In order to better make sense of these two dimensions, Grace and OCass (2005a) simply refer to core service and employee service to distinguish between what type of service is being offered and how it is offered. Overall, it can be noted that such a distinction takes account of the commonly-accepted idea that services are more about the whole customer experience rather than what a company does per se (i.e. core service) (Martin, 1999).
Table 3.1: Determinants of Service Quality Determinant

Reliability Responsiveness Competence Access Courtesy Communication Credibility Security Understanding / Knowing the customer Tangibles
Description
involves consistency of performance and dependability concerns the willingness or readiness of employees to provide the service; it also involves timeliness of the service means possession of the required skills and knowledge to perform the service involves approachability and ease of contact involves politeness, respect, consideration and friendliness of contact personnel means keeping customers informed in a language they can understand and listening to them involves trustworthiness, believability, honesty; also means having the customers best interest at heart is concerned with the freedom from danger, risk or doubt involves making the effort to understand the customers needs include the physical evidence of the service (Source: Adapted from Parasuraman et al., 1985)
Besides the inclusion of the people aspect in the 7 Ps, the significant role that employees play within the service industry is highlighted by Parasuraman et al. (1985) who indicate that quality evaluations are not merely based on the outcome of a service but that they also involve assessments of the manner of service delivery. From a firms point of view, employees are considered to be as much of your product [] as any other attribute
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of that service (Knisely, 1979 as cited in de Chernatony & DallOlmo Riley, 1999, p.182) and hence the staff of a service organization might also have the potential to enhance consumers perceptions of service quality through traits like responsiveness, reliability or empathy (McDonald et al., 2001). The challenges faced by service marketers due the inherent differences between physical goods and services additionally stress the importance of a companys employees. As such, the inseparability of services and the resulting close proximity between the provider and the customer during consumption makes both the interaction and the relationship between these two parties a critical component of service marketing (Caruana et al., 2000; Martin, 1999). Furthermore, the encounter between customers and employees is regarded as particularly vital when purchases are characterized by the absence of an exchange of tangible products (i.e. intangibility) which is common to most service settings (Chandon et al., 1997). In a similar way, research has found that well-trained and high-quality personnel can help to reduce consumers perceived purchase risks that are often associated with the variability of service performance (i.e. heterogeneity) (Hartman & Lindgren, 1993). In addition to the direct contact that exists between customers and employees during the service delivery stage, some authors have pointed to the crucial effects that the interaction between consumers themselves might have on their encounter with a service offering (e.g. de Chernatony & DallOlmo Riley, 1999; Keller, 1998). In this respect, the findings of previous studies have revealed that customers tend to be more satisfied and loyal when their self-image is compatible to and congruent with the perception they hold about the types of persons who would usually use the service (Martin, 1999).
While it has previously been stated that service consumers mostly engage in postpurchase evaluations based on the intangibility and simultaneity characteristics of services, research has nevertheless highlighted that the unique features of services impact on consumers to the extent that they have to adjust their behaviors at all stages of decisionmaking (Friedman & Smith, 1993). In this respect, word-of-mouth (WOM) is not only considered to be of prime importance for the marketing of services but it is also argued to be particularly significant in customers pre-purchase phase (Grace & OCass, 2005b; Mangold et al., 1999). Due to the highly intangible nature of services, it was found that
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such personal sources of information provide greater confidence to consumers prior to purchase and thus influence their brand choices (Grace & OCass, 2005b; Sundaram & Webster, 1999). Moreover, the findings of existing studies have revealed that users heavily rely on WOM in order to reduce the level of perceived risk and uncertainty that is often associated with the evaluation of services (Murray, 1991 as cited in Mangold, et al., 1999). Related to the effects of uncontrolled communications like WOM, Berry (1987) emphasized the important role that a service providers reputation might play in consumers pre-purchase stage. In his view, a strong reputation for quality will have a larger impact on customers perceptions in a service setting since the offerings in traditional goods markets are rather expected to be evaluated on the basis of more accessible cues (e.g. tangibles).
3.2. Service Branding Taking the rapid growth of the service industry into consideration, many authors have pointed to the lack of attention that has been given to the field of service branding by criticizing that existing studies predominantly conceptualized brands in terms of physical products (de Chernatony & DallOlmo Riley, 1998; Moorthi, 2002; OCass & Grace, 2003; Turley & Moore, 1995; van Riel et al., 2001). However, the preceding sections have highlighted and discussed the inherent differences that exist in the marketing principles of goods and services and hence the application of conventional branding approaches to a service setting must be questioned (Berry, 2000). Although brand consultants and practitioners were found to agree that branding efforts are common between products and services based on a brands overall role in linking a firms developed rational and emotional values with consumers perceptions, they indicated that service branding might differ in its execution with respect to the emphasis given to specific elements (de Chernatony & DallOlmo Riley, 1999). In contrast, the academic community often believes in a much stronger impact of the unique characteristics of services and therefore ascertains that various concepts from traditional product branding need to be adapted in order to be effective within the service sector (Berry, 1980; de Chernatony & DallOlmo Riley, 1999; Stuart, 1997 in McDonald et al., 2001; Turley & Moore, 1995). As a consequence, a common belief has evolved among academics that
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further research in the domain of branded service offerings (i.e. service brands) is warranted (Grace & OCass, 2005a).
3.2.1. The Importance of Service Brands Similar to product-based brands, a service brand is the basis on which to build trustful customer relationships and, as such, it is frequently seen as a consumer-directed informational device that serves as a promise regarding the future service experience (Berry, 2000; Davis et al., 2000). However, due to the intangibility and the perceived risk that is often associated with service offerings, a customers image or perception of a branded service is particularly crucial since it motivates his/her ultimate behavior toward the brand (Davis et al., 2000). Consequently, branding must be expected to be at least equally important for service providers as compared to producers of physical goods (Arora & Stoner, 1996; Berry, 2000; McDonald et al., 2001) although the significance of certain branding aspects is supposed to vary between these two types of offerings (Berry, 2000). On of the most fundamental differences between the principles of product and service branding lies in the fact that, within the service sector, the company name becomes the brand name since consumers usually view the whole firm as the provider of the service experience (e.g. airlines; insurance companies) (Berry, 2000). As such, the strength of a service brand is mainly determined by organizational attributes like the quality of the service, a companys employees and the relationship between the firm and its customers (Berry, 2000). On the other hand, the resulting multitude of interactions between consumers and staff at various points of a service firm might cause disparate experiences (i.e. heterogeneity) with a service brand and thus poses a major challenge to service marketers and managers (Bitner et al., 1994 in Berry, 2000). In a similar way, the intangible nature of services stresses the crucial importance of service brands as opposed to brands in physical goods markets. Since services often lack the tangibility that would allow for packaging, labeling or displaying, strong brands are a particularly powerful instrument for service organizations to increase consumers trust of and confidence in such invisible purchases (Berry, 2000, p.128). Due to the difficulty of evaluating services prior to consumption, a service brand is moreover believed to enable customers to better visualize and make sense of these intangible products (Berry, 2000).
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While physical differences normally make up a large part of a brand and its values, their absence in the service industry has additionally emphasized the role of branding as a means of differentiation (McDonald et al., 2001). Keeping in mind that service branding is concerned with communicating the benefits of an offering (Moss et al., 2008), a strong brand is considered to be a key element in a service providers effort to distinguish oneself from competition (Arora & Stoner, 1996).
3.2.2. Service Brand Dimensions Investigating service bands and their components has become a key priority for service marketers due to the common belief that brand dimensions might differ between service offerings and physical products (Berry, 2000; OCass & Grace, 2003). However, service brands have often exclusively been understood in terms of their brand names based on the fact that service attributes are considered to be difficult to communicate via any other means (Turley & Moore, 1995). While, at an abstract level, it might be appropriate to regard a brand as an overall representation of a product and its value (i.e. brand image), it yet has to be noted that consumers, at a lower level of abstraction, are expected to evaluate and respond to a variety of brand dimensions (Keller, 1993; 1998). From a customers point of view, a brand is thus more than a mere name but it rather involves all those associations that a consumer holds with respect to various product- and non-product-related attributes (Keller, 1993). Accordingly, Davis et al. (2000) state that a service brands image refers to the customers perception of the service experience which is created by those service elements, functional benefits and symbolic meanings that users associate with the service brand. In this respect, the mental representation of a brand consists of the totality of brand associations in a consumers mind (Aaker, 1991; 1996) and hence the challenge for service marketers lies in understanding these service brand associations. Although the development of strong brand associations is vital to all kinds of products, especially consumers associations with a service brand might differ to a large extent (OCass & Grace, 2003).
In an attempt to investigate the potential differences in the branding approach for services and physical goods, de Chernatony and DallOlmo Riley (1999) interviewed brand consultants and practitioners and eventually found brands to be the same for both types of
24
offerings. In their view, consumers brand associations, whether goods- or service-based, are not expected to differ since brands, in general, must be regarded as a combination of rational and emotional attributes that symbolize a promise for future customer satisfaction. While the brand consultants generally confirmed the unique characteristics of services, they nevertheless believed the branding processes to be identical for both types of offerings based on the fact that product as well as service brands are ultimately defined by consumers perceptual associations (de Chernatony & DallOlmo Riley, 1999). However, the findings of de Chernatony and DallOlmo Rileys (1999) study are not derived from the customers perspective and thus represent a significant limitation given the fact that it is the consumer and not the marketer who evaluates and responds to a brand in the end. While a service brand might essentially be viewed as a blend of what the company says the brand is, what others say, and how the company performs the service (Berry, 2000, p.129), it is still the individual customer who forms associations of various service-related dimensions. As a consequence, many authors have stressed the need for consumer-based information regarding those brand dimensions that hold meaning for service users (OCass & Grace, 2003; 2004). In order to understand how consumers formulate brand associations and to what extent these might differ among various types of offerings, Grace and OCass (2002) investigated the importance of brand dimensions for branded products and services based on several unstructured interviews with customers. As opposed to the earlier findings by de Chernatony and DallOlmo Riley (1999), Grace and OCass (2002) revealed that, from a consumers point of view, brand dimensions seemed to differ significantly between services and goods to the extent that some were found to be unique to one of the offerings whereas others were common to both (Fig. 3.2). More specifically, word-of-mouth communications as well as a companys physical facilities and employees have shown to be particularly important for the evaluation of branded services while attributes such as consumers feelings or their self-image congruence with respect to the image of the brand were primarily of concern to consumers of physical goods. Those brand dimensions that were highlighted to be common to both product categories included a customers actual encounter with the brand (i.e. experience/consumption), his/her perception of the typical user (i.e. user image) and the core offering of the product or service (Grace & OCass,
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2002). While the findings of this study can be related to the specific service characteristics that have been discussed in the preceding sections, they also appear to confirm the frequent assumption that service brand associations (dimensions) are distinct from those of physical goods and hence require practitioners and managers to adjust their marketing approaches to a certain extent.
Fig. 3.2: Key Dimensions for Branded Products and Services Unique To Products Common To Both Unique To Services
Core product/service Feelings Experience with brand
Servicescape
Word of Mouth
Self Image congruence Image of user Employees
(Source: Adapted from Grace & OCass, 2002)
Based on the results of their exploratory study, OCass and Grace (2003) later tried to determine the importance of various service brand attributes or associations for consumers when making decisions about their service brand choice. Therefore, they presented the previously identified service brand dimensions in several structured interviews with service users by asking respondents if these dimensions were meaningful to them and to what degree each dimension was significant and relevant for their image or attitude formation. Overall, the findings clearly showed that all of the highlighted service brand dimensions were nominated either directly or indirectly in the interviews (Table 3.2). When referring to column A, respondents mentioned to form associations with respect to all of the presented
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brand dimensions thus indicating that every single brand attribute was, at least to some extent, meaningful to consumers when making service brand-related decisions. Moreover, the interviews revealed the existence of certain service brand dimensions (i.e. servicescapes, feelings, user image, brand experience, WOM and employees) which were of particular importance to service customers formation of brand attitudes and images (Column B) although they were later found to vary among different types of service offerings. While some of the identified brand dimensions in OCass and Graces (2003) research have already been depicted in earlier models such as Kellers (1993, 1998) brand knowledge conceptualization (e.g. user image, price, brand name), others appear to be unique in a service context and might therefore demonstrate that consumers associations differ between product and service brands.
Table 3.2: Brand Dimensions of Services Service Brand Dimensions

Servicescape Feelings Brand name, trademark, etc. Brand personality Brand and self-image Image of typical user Price Experience with brand Brand advertising WOM Publicity Employees
A*
X X X X X X X X X X X X
B**
X X
Notes: Column A dimensions mentioned as having some meaning, however small; Column B dimensions that are very important when formulating brand images or attitudes (Source: Adapted from OCass & Grace, 2003)
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3.2.3. Service Branding Models Besides simply knowing how consumers formulate brand associations, a key point in branding is to understand the importance of these associations and the extent to which such dimensions influence customers attitudes and behaviors (OCass & Grace, 2004). Taking account of the previous lack of attention that has been given to the field of service branding, several academics have thus tried to model the relationship between consumers and their service brands in order to allow service providers to capitalize on the value of branding (e.g. Berry, 2000; Grace & OCass, 2005a). By understanding the importance and the kind of brand dimensions that impact on consumers evaluation of service brands, marketers will have the opportunity to better communicate their service offering in order to benefit from satisfied and loyal customers.
Although previous branding frameworks (e.g. de Chernatony & DallOlmo Riley, 1998; Keller, 1993; 1998) were argued to be relevant to both products and services based on their common brand components, many authors (Bateson, 1995a; Berry 1980; 2000; Grace & OCass, 2005a) have questioned their application to service offerings due to their specific characteristics. In order to cope with these limitations, Berry (2000) studied the strategies of 14 mature service organizations in an attempt to theoretically link various service brand dimensions with the performance of these companies and, as a result, proposed his famous Service Brand Equity model (Fig. 3.3). Similar to the earlier conceptualization of Keller (1993), Berry (2000) modeled brand equity as consisting of band awareness and brand meaning (brand image) which are both related to three common antecedents namely a companys presented brand, external communications and the consumers experience. Whereas brand awareness simply represents a customers ability to recognize or recall the brand when being presented with a cue, brand meaning or image refers to consumers dominant perception of the brand and its associations. As such, several brands in the same category might be high in awareness but their meaning is expected to vary among customers (Berry, 2000). According to Berrys (2000) understanding, a companys presented brand involves all the information that a consumer receives from the firm itself (i.e. controlled communication like advertising, physical facilities or brand name) while external brand communications rather include those informational cues that are provided
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through such sources of communication which are beyond the firms control (e.g. WOM, publicity). Customer experience it the third independent variable in Berrys service branding model and is mainly related to those associations and beliefs which service users form as a result of their direct experience with the company during the consumption stage.
Fig. 3.3: The Service Brand Equity Model
(Source: Adapted from Berry, 2000)
Based on his theoretical conceptualization, Berry (2000) notes that the majority of brand dimensions are similar for goods and services and hence he concludes that service branding is mainly supposed to differ in its degree, not kind, from conventional product branding. In this respect, a service consumers awareness of the brand is primarily influenced by the companys presented brand (i.e. controlled communication) while users may nevertheless become aware of and form impressions about the brand through independent sources such as word-of-mouth communications or public relations. Due to the labor-intensive nature of services (human performance vs. machine performance), Berry (2000) similarly expects brand meaning to be predominantly affected by a customers actual experience with the company and its employees although controlled and uncontrolled communications might have a secondary impact. However, in case of new clients who have had little or no direct
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experience with a firms service before, a companys presented brand as well as external communications will play a greater role in shaping customers brand image. With respect to the experiential nature of services, service brand equity is additionally modeled to be disproportionately influenced (via brand meaning) by those beliefs and associations that are based on a consumers first-hand experience with the company. Whereas advertising might be able to generate brand awareness and stimulate customer trial, a presented band [] cannot rescue a weak service (Berry, 2000, p.130). Overall, customers experiences are the major determinant of brand equity and image for both services and products but the key difference lies in the fact that human performance rather than machine performance is critical for branded service offerings (Berry, 2000).
While Berrys (2000) Service Brand Equity model has overcome the limitations of previous models (e.g. de Chernatony & DallOlmo Riley, 1998; Keller, 1998) which tended to conceptualize brands mainly in terms of physical products, its brand dimensions and their interrelationships still have not been validated from the consumers perspective. In addition, the majority of existing branding frameworks lacks empirical testing, uses an inconsistent terminology and identifies different brand elements (Table 3.3) (Grace & OCass, 2005a). For example, it was found that brand dimensions such as brand name, feelings and experience were common to all of the three investigated models whereas other dimensions like price and user image (Keller, 1998) or WOM and advertising (Berry, 2000) revealed to be unique to individual frameworks. Taking account of these weaknesses, Grace and OCass (2005a) intended to explain, from a consumers point of view, how service users evaluate and respond to service brands by linking those brand components that are meaningful to customers with various outcome variables. Generally speaking, they expected service users to be satisfied and to form positive brand attitudes as a result of favorable brand evaluations. Likewise, customer satisfaction and overall brand perceptions were believed to jointly determine consumers future purchase intentions. Within their Service Brand Verdict (SBV) model (Fig. 3.4), Grace and OCass conceptualized a service brand as consisting of two basic higher order dimensions (brand evidence and brand hearsay) that, in turn, are covered by several lower order attributes of which consumers are supposed to formulate brand associations. While the brand evidence construct refers to all
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those brand attributes that a service user experiences during the pre-purchase and consumption stage (brand descriptors), brand hearsay involves those types of communication (i.e. controlled and uncontrolled) that a consumer exclusively receives prior to purchase. As such, brand evidence represents more than just the tangible dimensions of the brand (e.g. brand name, price) but it also comprises rather intangible service brand attributes which influence consumers brand evaluations (e.g. feelings, employee service). On the other hand, brand hearsay is related to the manner in which the brand evidence is communicated. In order to incorporate service brand dimensions which actually hold meaning to the brand user as compared to marketers and practitioners, Grace and OCass (2005a) mainly included those brand components that had already been validated through qualitative studies (Fig. 3.2) (OCass & Grace, 2002).
Table 3.3: Comparison of Brand Dimensions

Brand Dimension Brand name, logo Core product/service Price Brand personality User imagery Feelings and experiences Servicescapes Advertising WOM Publicity Keller (1998) Brand awareness Product-related attributes Non-product-related attributes Non-product-related attributes Non-product-related attributes Non-product-related attributes Not shown Not shown Not shown Not shown de Chernatony & DallOlmo Riley (1998) Risk reducer naming policy Functional capability service Not shown Personality Not shown Experience Not shown Not shown Not shown Not shown Berry (2000) Companys presented brand Not shown Not shown Not shown Not shown Customer Experience with company Companys presented brand Companys presented brand External brand communications External brand communications
(Source: Adapted from Grace & OCass, 2005a)
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Grace and OCass (2005a) then estimated their Service Brand Verdict model based on the responses of supermarket customers and users of banking services and found all their hypotheses to be confirmed. Overall, satisfaction had a strong effect on consumers brand attitudes (0.58) which, in turn, considerably influenced purchase intentions (0.72). While such relationships had already been acknowledged by several previous studies, Grace and OCass findings also revealed significant effects from the brand evidence and brand hearsay constructs to both consumers satisfaction and brand attitudes. With respect to the specific sources of service brand information, it has been shown that only controlled communications such as advertising and promotions were related to brand hearsay. In contrast, core service, price/value for money and a companys physical surroundings (i.e. servicescapes) were the most important service brand dimensions related to brand evidence. Furthermore, Grace and OCass (2005a) found that brand hearsay significantly influenced brand evidence and therefore concluded that a service firms advertising and promotional efforts might strongly impact on the way in which customers perceive a service brand (brand evidence). However, due to the high variability within the service industry itself, it has been stressed that these results might possibly differ among distinct types of services.
Fig. 3.4: The Service Brand Verdict Model
(Source: Adapted from Grace & OCass, 2005a)
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3.3. The Service Brand Loyalty (SBL) Model Although the results of Grace and OCass (2005a) study have provided crucial insights into the relationship between service users and their brands, the effects among the variables in their SBV framework have so far only been tested in a single research for supermarkets and banking services. Due to these limitations as well as the general lack of attention that has been given to the field of service branding, we will now propose and conceptualize the Service Brand Loyalty (SBL) model which is the focus of the empirical investigation of this thesis. Based on the findings of the previous sections of this paper, we will attempt to model how consumers evaluate and behave towards service brands by slightly modifying the earlier discussed Service Brand Verdict framework. Taking account of the specific service marketing principles and the existing research about service brand components, the Service Brand Loyalty (Fig. 3.5) model will suggest several hypotheses that will be empirically investigated and tested in the two subsequent chapters of this thesis. Overall, the majority of service brand dimensions that are involved in the framework have already been outlined in the preceding sections and hence the focus of this part is on the definition of the five key constructs (Table 3.4) as well as their hypothesized interrelationships.
Fig. 3.5: The Service Brand Loyalty Model
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Table 3.4: Definitions of the Key Constructs of the SBL Model Construct
Brand Loyalty
Definition
Brand loyalty is the consumers ultimate response to a brands evaluation in the form of a deeply held commitment to rebuy and recommend the service brand consistently in the future despite situational influences and marketing efforts having the potential to cause switching behavior Brand attitude is the consumers overall positive or negative disposition toward the brand resulting from their perceptions of and satisfaction with the brand stimuli. It represents the consumers global assessment of all brand stimuli rather than their immediate response to the brands performance Satisfaction is the consumers positive/negative response to the perceived service performance and the confirmation/disconfirmation of pre-purchase service expectations. It represent the consumers immediate response to the brands performance rather than their global assessment of all brand stimuli Brand evidence refers to the consumers set of associations regarding the service brand dimensions directly experienced during the pre-purchase and consumption stage of decision-making. It provides the descriptors of the brand in the form of the brand name, price, servicescapes, core service, employee service, self-image congruence and feelings aroused during usage Brand hearsay refers to all communications (i.e. controlled and uncontrolled by the marketer) regarding the brand that are received and experienced by consumers in the pre-purchase stage of decision-making (Source: Adapted from Grace & OCass, 2005a)
Brand Attitude
Satisfaction
Brand Evidence
Brand Hearsay
3.3.1. Brand Loyalty In contrast to Grace and OCass (2005a) conceptualization, brand loyalty instead of a consumers mere purchase intention is modeled as the ultimate dependent variable in the SBL framework. It is often understood as consisting of both a behavioral and an attitudinal dimension (Aaker, 1991) and thus not only refers to customers future purchasing behavior but also to a certain degree of a deeply held dispositional commitment which induces users to resist situational influences and marketing efforts that might have the potential to cause brand switching behaviors (Oliver, 1999 in Chaudhuri & Holbrook, 2001). As such, brand loyalty has been shown to result in repeat sales as well as positive word-of-mouth and, in turn, is expected to lead to an organizations future profitability (Caruana, 2002; Juhl et al., 2002). From a firms perspective, previous research has additionally found brand loyalty to have the strongest effect on brand equity (Yoo et al., 2000) thus indicating its potential to cause superior brand performance outcomes such as price premiums or greater market
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shares (Aaker, 1996; Chaudhuri & Holbrook, 2001). Based on the assumption that it is the final outcome of a consumers brand evaluation, brand loyalty is expected to result from a persons overall disposition toward the brand (brand attitude) (Chaudhuri & Holbrook, 2001; Martin, 1999). In this respect, previous research has shown that customers purchase intentions and behaviors are significantly influenced by brand attitudes (OCass & Grace, 2004) and that consumer emotional responses to brands (brand affect) strongly impact on brand loyalty (Chaudhuri & Holbrook, 2001).
3.3.2. Brand Attitude Brand attitude is defined as the consumers overall positive or negative disposition toward the service brand and is expected to have a strong effect on brand loyalty and behavioral intentions (Keller, 1998). In the Service Brand Loyalty model, brand attitude is affected by consumers perceptions of and satisfaction with all brand stimuli that are experienced in the pre-purchase and consumption stage including brand evidence and brand hearsay (Grace & OCass, 2005a). With respect to the different stages in the relationship between the consumer and the service offering (pre-purchase, consumption, post-purchase), brand attitude is understood as a more enduring global assessment of the brand as compared to a customers immediate response to its performance (i.e. satisfaction). For instance, some of the rather tangible and more accessible service brand dimensions (e.g. price, servicescapes) might directly shape consumers overall disposition toward the brand while those brand attributes that are experienced in the consumption stage (e.g. employee service, feelings) might indirectly influence attitudes through consumers satisfaction evaluation. Similarly, communication variables might be related to satisfaction and brand attitudes since earlier studies found that advertising, for example, could partially mitigate the detrimental effects of negative product performances on customers brand attitudes (Smith, 1993 in Kempf & Smith, 1998).
3.3.3. Satisfaction Satisfaction, as compared to brand attitude, refers to the customers immediate response to the brands performance and thus results from the confirmation/disconfirmation of users expectations (Spreng et al., 1996). This being the case, satisfaction is considered to be the
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outcome of customers post-purchase evaluations of both tangible and intangible brand attributes (brand evidence). Keeping in mind that satisfaction is often closely related to service quality (Caruana et al., 2000), several service brand dimensions have been identified as being strongly associated with satisfaction. For example, the interaction with the service personnel (i.e. employee service) (Johns, 1999) as well as a companys physical surroundings (Bitner, 1992) have shown to affect service satisfaction while other brand stimuli such as price, brand name and core service were found to impact on consumers perceived service quality (Berry, 2000; Dodds et al., 2001). On the other hand, it has been noted that overall satisfaction not only involves a judgment of individual attribute performance but also a satisfaction judgment which is based on the expectations that result from various sources of information (Spreng et al., 1996). Taking account of this fact, the Service Brand Loyalty framework models satisfaction as a response to both, service attributes (i.e. brand evidence) and service information (i.e. brand hearsay) such as WOM and advertising. Whereas satisfaction is basically seen as the outcome of consumers service brand performance evaluation, it is similarly argued to be a key determinant of brand attitude and customer behavior (mediated via attitude in the SBL model). In this respect, a large number of studies have found strong effects of satisfaction on brand attitudes and brand loyalty (Andreassen & Lindestad, 1998; Spreng et al., 1995 in Grace & OCass, 2005b; Spreng et al., 1996). In fact, Cronin Jr. and Taylor (1992) explicitly state that customer satisfaction is expected to lead to the formation of favorable brand attitudes.
3.3.4. Brand Evidence Within the Service Brand Loyalty model, brand evidence is understood as a higher order construct that comprises all those brand associations that are meaningful to a consumer when evaluating a service brand. More specifically, these associations are based on a variety of service band dimensions that a customer experiences during both the prepurchase and consumption stage. Prior to purchase consumers can primarily evaluate a service brand through its more tangible or known attributes such as the brand name, servicescapes and price. For example, the importance of a brands name has often been highlighted due to its potential to signal quality, to evoke feelings of trust and to affect choice decisions (Arora & Stoner, 1996; Keller, 1998; Turley & Moore, 1995). Moreover,
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brand names are expected to play an even more important role within a service setting due to the fact that a services quality is often difficult to evaluate before consumption and hence purchase decisions might be made on other criteria (Andreassen & Lindestad, 1998). In a similar way, a companys physical surroundings have been found to provide consumers with valuable tangible clues that are used to infer beliefs about quality and other service attributes (Bitner, 1992). However, based on the specific characteristics of services, a customers evaluation process continues in the consumption stage and thus previously inaccessible (i.e. intangible) service brand attributes are judged by the consumer. In this respect, brand dimensions such as the actual encounter with the service staff (i.e. employee service) (Chandon et al., 1996), a users self-image congruence (Keller, 1998; Martin, 1999) or the feelings that occur during service provision (Padgett & Allen, 1997 in OCass & Grace, 2004) were found to be particularly crucial. Overall, the brand evidence of service brands involves more than just the tangible descriptors of the brand (e.g. brand name, servicescapes) but it rather represents all those service brand dimensions that influence a consumers brand evaluation. As such, brand evidence is the foundation upon which customers responses are based (Grace & OCass, 2005a).
3.3.5. Brand Hearsay Brand hearsay refers to all service brand-related communications (e.g. marketercontrolled or uncontrolled) that are experienced by the consumer in the pre-purchase stage. In this respect, controlled communications include advertising and promotions while uncontrolled communications mainly consist of word-of-mouth and non-paid publicity (Grace & OCass, 2005a). Prior to purchase, these sources of information were found to directly shape consumers expectations and thus must be strongly linked with customer satisfaction (expectancy-disconfirmation paradigm) (Babin & Babin, 2001; Grace & OCass, 2005b). Moreover, it has been shown that advertising affects consumers attitudes, purchase intentions and service brand perceptions (Brodie et al., 2009; Kempf & Smith, 1998) while WOM was revealed to significantly impact on customers attitudes and purchasing behaviors (Mangold et al., 1999; Sundaram & Webster, 1999). Whereas Grace and OCass (2005a) simply distinguish between controlled and uncontrolled
communications, the SBL model proposes brand hearsay to be determined by three
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dimensions based on the fact that WOM as a personal source of information strongly differs from non-paid publicity. Although both communication variables are categorized as being uncontrolled by the marketer, the intangible nature of service offerings has often placed a higher importance to word-of-mouth communications. Following this discussion, it can be noted that brand hearsay is distinctly different from brand evidence to the extent that brand evidence represents the dimensions of a brand whereas brand hearsay rather refers to the way in which these dimensions are communicated to the consumer (Grace & OCass, 2005a). Besides its direct relation to customer satisfaction and brand attitude, brand hearsay is also hypothesized to affect brand evidence since communication variables have often been expected to influence customers evaluation of brand dimensions. In this respect, the common difficulty in determining a services absolute level of quality might result in consumers perceptions of brand attributes to be influenced by various sources of information that they had received prior to purchase or consumption. Based on the above discussion and the conceptualization of the Service Brand Loyalty model, the following research hypotheses are established:
H1: Brand evidence is positively related to satisfaction H2: Brand evidence is positively related to brand attitude H3: Brand hearsay is positively related to satisfaction H4: Brand hearsay is positively related to brand attitude H5: Brand hearsay is positively related to brand evidence H6: Satisfaction is positively related to brand attitude H7: Brand attitude is positively related to brand loyalty
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4. THE EFFECTS OF MODERATING VARIABLES

Some researchers argue that behavior is primarily determined by an individuals personality (Xue, 2008) and, for that reason, various personality characteristics and their potential role as moderators have been key issues in consumer-based marketing studies during the last couple of years (e.g. Dawar & Lei, 2009; Phelps & Thorson, 1991; Sundaram & Webster, 1999; Xue, 2008). In particular, the increasingly competitive nature of todays industries and the resulting appreciation of the emerging principles of Customer Relationship Management (CRM) have encouraged many marketers to capitalize on the value of market segmentation by effectively dividing ones customer base into segments with similar needs, interests or behaviors. As such, a persons degree of brand familiarity and a customers level of involvement have often been viewed as suitable criteria for segmentation that additionally revealed to moderate and impact on the relation among several marketing constructs and consumers subsequent responses and behaviors (Chang & Hsieh, 1997; Park & Stoel, 2005; Tam, 2008). In this respect, moderation does not imply any causal order but rather refers to a situation in which a moderator influences the direction and/or strength of the relationship between an independent and a dependent variable (James & Brett, 1984 in Caruana et al., 2000). With reference to the previously presented SBL model, this section will now examine the possible moderation effects of brand familiarity and consumer involvement which might be expected among the focal constructs of the framework.
4.1. Brand Familiarity The interest of a growing amount of marketing studies in the concept of familiarity has derived from the idea that such consumer characteristics may guide customers attention to a specific brand and hence influence an individuals ultimate brand choice (Park & Stoel, 2005; Sundaram & Webster, 1999). More specifically, it has been argued that brand familiarity might be particularly relevant for services (vs. physical goods) due to the fact that they are dominated by experience attributes which, as such, can only be evaluated during consumption (Tam, 2008).
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Based on the earlier conceptualizations of Alba and Hutchinson (1987), Park and Stoel (2005, p.150) define brand familiarity as the number of brand-related direct or indirect experiences that have been accrued by the consumer and thus take into account that a persons degree of familiarity not only originates from his/her actual purchase or consumption of the brand. In addition, various other brand experiences like the exposure to advertisements or WOM (i.e. indirect experiences) as well as the contact with a brand in a store ultimately contribute to the consumers accumulated level of brand familiarity (Alba & Hutchinson, 1987). In this respect, it becomes apparent that experience, familiarity and knowledge must considered to be closely related (Carrillat et al., 2005; Tam, 2008).
When referring to previous studies that investigated the influence of consumers characteristics on their subsequent responses, several moderating effects of brand familiarity on satisfaction and behavioral intentions have been identified (e.g. Dawar & Lei, 2009; Laroche et al., 1996; Tam, 2008). While Arora and Stoner (1996), for example, found higher brand familiarity to enhance purchase intentions for services based on an experimental study, Laroche et al.s (1996) research revealed that the degree of brand familiarity indirectly influenced consumers willingness to buy that brand. Similarly, a more significant relationship between satisfaction and repeat purchases was noticed for high familiarity customers (Tam, 2008). Overall, it has been suggested that such findings are rooted in a more positive evaluation of familiar brands which might be caused by the exposure effect (Heath, 1990 in Laroche et al., 1996) indicating that consumers often tend to like stimuli more as exposure increases since stronger brand associations are developed (Zajonc & Markus, 1982 in Tam, 2008). Other studies within this field also found brand familiarity to moderate the impact of WOM on brand evaluations and thus concluded that personal sources of information might be more important for the low familiarity segment (Sundaram & Webster, 1999). As a result of these findings, we propose the following moderation hypothesis:
H8: A consumers degree of brand familiarity affects the direction and/or strength of several relationships between the main constructs in the SBL model.
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4.2. Consumer Involvement During the last three decades, the involvement construct has received widespread attention in the field of consumer marketing (Warrington & Shim, 2000) since it has frequently been regarded as an appropriate alternative for market segmentation (Chang & Hsieh, 1997). Moreover, many academics have pointed to the fact that a consumers degree of involvement might be expected to influence various key marketing variables such as customer satisfaction, behavioral outcomes or the importance of quality dimensions (Bienstock & Stafford, 2006). However, so far consumer involvement has almost exclusively been studied in the context of physical products (Bienstock & Stafford, 2006; Gabbott & Hogg, 1999) although services, by themselves, were commonly found to be rather highly-involving offerings (Aldlaigan & Buttle, 2001). While involvement is generally viewed as a motivational variable that is related to a persons feelings of self-relevancy (Aldlaigan & Buttle, 2001; Warrington & Shim, 2000), consumer involvement is often defined as an objects (e.g. product or service) degree of personal relevance based on the consumers inherent needs, values and interests (Zaichkowsky, 1985). As such, the involvement with a service must be understood as an interaction between the individual and the stimulus which consists of both, the relevance of the service to the individual and his/her interest in this service. Similarly, this implies that the degree of involvement might vary significantly among consumers for the same product or service depending on the relationship between the individual customer and the offering (Gabbott & Hogg, 1999; Zaichkowsky, 1994).
Overall, the results of previous research point to the fact that a persons level of involvement may impact on the perceptions of service quality, the extent of information search and on the way in which consumers evaluate and respond to an offering (e.g. Chang & Hsieh, 1997; Gabbott & Hogg, 1999; Solomon, 2002 in Bienstock & Stafford, 2006). In this respect, many marketers have realized the critical importance of understanding the involvement construct in order to better target and retain their customers, for instance by means of appropriate marketing strategies and communications (Bienstock & Stafford, 2006).
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In an attempt to categorize customers based on their extent of product involvement, Warrington and Shim (2000), for example, identified different segments with distinct characteristics. Compared to the low involvement group, the highly involved consumers not only revealed to be less price-sensitive but they were also found to be more motivated to search for and process product-related information when evaluating an offering. Moreover, the high involvement segment turned out to emphasize a strong need for personal attention and customer service (Warrington & Shim, 2000). In a similar way, the research by Chang and Hsieh (1997) has shown that the degree of involvement might affect consumers decision-making as well as attitude formation process. More specifically, the highly involved customers in their study tended to evaluate services by also considering sources of information that were available prior to purchase (e.g. advertising, promotions and WOM) whereas the people in the low involvement group mainly formed attitudes towards the service offering based on their direct experience (Chang & Hsieh, 1997). Besides these findings, Chang and Hsieh (1997) additionally noticed that customers with different levels of involvement emphasized different dimensions of service quality (e.g. tangibles vs. intangibles). When referring to consumers ultimate brand choice, previous research has also shown that the congruence of a persons self-concept with respect to a brands image (i.e. self-congruity) is a key influential factor only under conditions of high product involvement (Xue, 2008). As such, these findings might confirm earlier suggestions that expected particularly highly involved consumers to develop strong brand loyalties and preferences (Zaichkowsky, 1985). Based on the above considerations, we propose a second moderation hypothesis:
H9: A consumers degree of service involvement affects the direction and/or strength of several relationships between the main constructs in the SBL model.
So far, the literature review has provided the theoretical background for this thesis and concluded with the conceptualization of the Service Brand Loyalty (SBL) model underlying the empirical investigation of this study. Having proposed the research hypotheses, the next part will now outline and discuss the methodology of this paper before the results will be presented.
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Part Three: Methodology
5. METHODOLOGY
Having established the theoretical underpinnings in the preceding section, the literature review has concluded with the presentation and discussion of the Service Brand Loyalty (SBL) model and the proposition of this studys hypotheses. In this respect, the methodology chapter will now outline and defend the research methods that have been adopted in order to answer the underlying research questions of this thesis by empirically investigating the relationships among the key constructs in the SBL framework. As such, this chapter will address the most critical methodological issues such as the overall research design, the measurement of the focal variables and the data collection procedure. Furthermore, the SBL framework will be specified and the potential limitations of the applied research approach are highlighted.
5.1. Research Approach & Sample In order to answer the underlying research questions and to empirically test the proposed hypotheses in the Service Brand Loyalty model, a quantitative research approach based on the distribution of online surveys was followed within this study. Such a quantitative research strategy is one of the most commonly applied methods within the field of consumer marketing since it involves the collection of customer-based data which, in turn, can be used to statistically analyze and investigate the a-priori specified relationships among variables of interest to the corresponding study (Neuman, 2003). Whereas previous branding models (e.g. Berry, 2000; de Chernatony & DallOlmo Riley, 1998) still lack validation from the customers perspective (Grace & OCass, 2005a), this thesis overcomes these limitations by seeking consumer-based information to examine the effects of various service brand dimensions on customers responses and behaviors. Moreover, the use of self-administered surveys is in congruence with the methods applied within the most recent studies on service branding (e.g. Brodie et al., 2009; Grace & OCass, 2005a/b; OCass & Grace, 2003) and thus allow for a better comparison of research findings. Due to the partly explorative nature of this study and the scarcity of existing research in the field of service branding, the focus of this thesis is on validating previous results within
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a new service setting by predicting the relationships between the key constructs in the Service Brand Loyalty model. In this respect, it was decided to conduct the online-based survey amongst university students of the Aarhus School of Business, Denmark. Although the use of student samples has often been criticized by academics for not possessing the properties of truly representative samples, their application in consumer research is not only a common procedure (Arora & Stoner, 1996) but has also been argued to be beneficial for theory testing and validation purposes due to the inherent advantages of such maximally homogeneous samples (Calder et al., 1981 in Yoo & Donthu, 2001). More specifically, the decision to distribute online surveys was based on the fact that students are generally expected to be highly familiar with internet technologies and that it allowed the collection of a large amount of data in an easy-to-administer, inexpensive and less time-consuming way, thereby also accommodating both the financial and time constraints underlying this thesis. Furthermore, the use of online questionnaires, as compared to traditional paper and pencil surveys, offered a key benefit in that it facilitated the inclusion of a large number of questions which was a major concern of this study.
Although the sampling frame for this research was based on the business schools total amount of students, it was not possible to obtain and access any database which included the university email addresses of the whole target population. As such, this study adopted a non-probability sampling procedure by which survey invitations were finally sent to a convenience sample consisting of those student email accounts that were available from the universitys online student platform (CampusNet). However, it has to be noted that this sample was restrained to several academic programs and courses and hence the potential non-response from certain student segments might bias the underlying research findings to some extent.
5.2. Brand Stimuli While Grace and OCass (2005a) have so far tested their Service Brand Verdict model for supermarkets and banking services, this study investigates consumers evaluation of and behavior towards airline brands. Generally speaking, this decision was derived from two facts: Firstly, qualitative studies have previously shown that consumers strongly associated
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airlines with a typical service offering when being asked to think of and talk about service brands (OCass & Grace, 2003) and, secondly, the airline industry itself is argued to possess certain features and attributes which make their investigation in a service branding context highly valuable. As such, airline services are often described as traditional experience goods (vs. search or credence goods) which are characterized by a low tangibility of output, a low level of customer control, a medium perceived risk involved (only few tangible elements) and a high degree of interpersonal services since both customers and employees are present and perform actions during the consumption stage (Bitner, 1992; Moorthi, 2002; Johns, 1999). Moreover, the rather experiential and intangible nature of airline services might additionally emphasize the importance of physical surroundings (e.g. affecting the quality of social interaction) as well as WOM and other communications (Bitner, 1992; Moorthi, 2002). While the application of student samples within this study might not be representative with respect to an airlines overall target group, it is nevertheless expected that students and other younger consumers have become an increasingly important market segment for the airline industry. Such customers are often believed to have the necessary time, flexibility and motivation to make frequent use of air travel and hence airlines are assumed to be of particularly high relevance to students in todays society. In a similar way, the emergence of Low-Cost Carriers (e.g. Ryan Air, EasyJet) during the last couple of years has made flying more accessible and affordable for the majority of students. As a result, the use of student samples was considered to be appropriate for the purpose of the underlying study although it has to be noted that business travelers were most likely restricted from the analysis due to the sampling procedure discussed in the previous section.
5.3. Questionnaire Design The questionnaire was designed, administered and later distributed with the help of the online survey tool STUDSURVEY. Overall, it consisted of 94 questions which were basically split into three parts covering the key constructs of the Service Brand Loyalty model, the moderating variables and respondents demographic characteristics. An email containing the invitation to participate in the survey was sent to the obtained student email
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addresses in the form of a hyperlink on which recipients had to click in order to get forwarded to the actual questionnaire in case they were willing to take part in the study. Prior to presenting the questions, the survey introduced participants to the topic and purpose of the research, it assured the strict confidentiality of data and it provided instructions on how to rate the items. In order to make sure that respondents qualified for the survey, they were asked to think of an occasion in the past where they had to choose among competing airlines thus guaranteeing that participants had previously flown with any airline. Subsequently, they were required to indicate the name of the chosen airline and to keep this airline in mind when answering the following survey questions. This procedure allowed taking account of the variability within the airline industry by not restricting respondents airline choice to any particular brand or strategic grouping (e.g. low-cost carriers vs. established long-distance airlines or flag carriers) while at the same time assuring that they referred to a specific brand during the whole time when rating the survey items. After this introductory part, participants were asked to respond to the questions related to the SBL models key constructs (72 items) which were followed by the items measuring consumers degree of brand familiarity and service involvement (13 items). Finally, the last part of the questionnaire requested respondents to provide demographic information such as their age, employment status or nationality.
5.4. Measures The variables in the Service Brand Loyalty (SBL) model are conceptualized as being latent since they are not directly observable and consequently all constructs were operationalized and measured with multiple indicators. In order to allow for a better comparison with previous findings, most of the scales and items were adapted from the research by Grace and OCass (2005a) and have only been slightly rephrased to fit the underlying airline context (Table 5.1). Almost all items have shown good reliability and validity properties in their study and were thus considered to be suitable. Brand loyalty has not been part of Grace and OCass framework and hence a modified version of the scale developed by Yoo and Donthu (2001) was used. All of the 13 latent constructs involved in the SBL model were measured on a seven-point Likert scale ranging from strongly disagree to strongly agree and respondents were introduced to the questions of each
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variable by asking them to indicate the extent to which they agree with the following statements. With respect to the core service dimension of the brand evidence construct, survey participants were first explained what was meant by an airlines core service before they were required to respond to the items. As such, the core service of an airline was described by offering several examples like providing safe and timely air transportation to various destinations or providing on-board service as well as airport ground service which were based on a discussion by Tsaur et al. (2002). For a detailed overview of the questions that have been used in this study to measure the constructs of the SBL model please refer to Table 5.2.
Table 5.1: Summary of Construct Measures Construct

Brand Name Price / Value for Money Servicescapes Core Service Employee Service Feelings Self-Image Congruence Controlled Communications Publicity Word-of-Mouth Satisfaction Brand Attitude Brand Loyalty Brand Familiarity Consumer Involvement
No. of Items
5 4 4 5 7 12 4 6 5 5 5 5 5 3 10
Item Labels
BN1-BN5 PV1-PV4 SS1-SS4 CS1-CS5 ES1-ES7 FE1-FE12 SI1-SI4 CC1-CC6 UC1-UC5 UC6-UC10 SA1-SA5 BA1-BA5 BL1-BL5 FAM1-FAM3 INV1-INV10
Source
Grace & OCass (2005) Sweeney & Soutar (2001) Cronin Jr. & Taylor (1992) Grace & OCass (2005) Cronin Jr. & Taylor (1992) Jayanti (1995) Sirgy et al. (1995) Holbrook & Batra (1987) Bansal & Voyer (2000) Bansal & Voyer (2000) Caruana et al. (2000) Yoo & Donthu (2001) Yoo & Donthu (2001) Carrillat et al. (2005) Zaichkowsky (1994)
With reference to the moderating variables, measures for brand familiarity and consumer involvement have similarly been adopted from existing studies that had proven the scales validity and reliability. Taking into account that familiarity not only results from a persons actual purchase or consumption of a product (Tam, 2008), this study applied a self-reported measure for brand familiarity including three items based on the scale developed by
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Carrillat et al. (2005). As such, respondents were asked to indicate their degree of familiarity, experience and knowledge with respect to the airlines offerings, service and facilities on a seven-point scale reaching from very unfamiliar/inexperienced/not knowledgeable to very familiar/experienced/knowledgeable. On the other hand, the involvement construct was measured by Zaichkowskys (1994) revised 10-item Personal Involvement Inventory (PII) which was found to be the most widely used scale in involvement research. While focusing on an objects relevance to the individual (i.e. object in terms of airlines or the act of flying), the PII measures a persons state of involvement with a seven-point semantic differential scale by incorporating both a cognitive (i.e. interest) and an affective (i.e. values and needs) dimension. In that case, a consumers interest in an object is related to the items important, relevant, valuable, needed and means a lot to me while his/her values and needs are measured by the items interesting, appealing, fascinating, exciting and involving (Zaichkowsky, 1994). Within the online survey, participants were thus asked to respond to these 10 items based on how they perceive the service in general (i.e. To me flying/air travel is). The Personal Involvement Inventory has not only shown to possess higher reliabilities than other involvement scales (e.g. Consumer Involvement Profile) but it is also claimed to be context-free (products vs. services) thus making it particularly suitable for the underlying study (Gabbott & Hogg, 1999; Zaichkowsky, 1994).
Before the survey was ultimately distributed to the whole sample, a pretest among approximately 25 fellow students has been conducted in order to check for face validity and to ensure that questions were relevant, understandable and easy to score for respondents. As a result of this pilot study, the questionnaire was slightly refined by rephrasing and deleting a few items and by adding some further demographic variables. Moreover, an initial statistical inspection revealed good scale reliabilities as well as appropriate loadings between items and their respective constructs.
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Table 5.2: Construct Measures used in the Online Survey Construct

Brand Name
Label
BN1 BN2 BN3 BN4 BN5 PV1 PV2 PV3 PV4 SS1 SS2 SS3 SS4
Indicator / Question
The name of this airline tells me a lot about what to expect from this airline The name of this airline tells me a lot about this airline The name of this airline means something to me The name of this airline sends a message to me about this airline The name of this airline tells me everything I need to know about this service This airlines services are reasonably priced This airline offers satisfactory value for what it costs This airline provides a good service for the price Using this airline is economical The facilities of this airline, both at the airport and on the airplane itself, suit my needs This airlines physical facilities, both at the airport and on the airplane itself, are visually attractive This airlines employees have a neat and well-dressed appearance The appearance of the physical facilities of this airline, both at the airport and on the airplane itself, is in accordance with the type of service provided The core service provided by this airline suits my needs The core service provided by this airline is reliable I can rely on this airline to provide good core service This airline provides quality core service The core service provided by this airline is superior I receive prompt attention from this airlines employees Employees of this airline are always willing to help me The employees of this airline are never too busy to respond to my requests I can trust the employees of this airline I feel safe in my transactions with this airlines employees Employees of this airline are polite Employees of this airline give me personal attention When flying with this airline I feel annoyed (reverse scored) When flying with this airline I feel happy When flying with this airline I feel irritated (reverse scored) When flying with this airline I feel frustrated (reverse scored) When flying with this airline I feel pleased When flying with this airline I feel sad (reverse scored) When flying with this airline I feel disgusted (reverse scored) When flying with this airline I feel uneasy (reverse scored) When flying with this airline I feel good When flying with this airline I feel nervous (reverse scored) When flying with this airline I feel confident When flying with this airline I feel impressed
Price / Value for Money
Servicescapes
Core Service
CS1 CS2 CS3 CS4 CS5 ES1 ES2 ES3 ES4 ES5 ES6 ES7 FE1 FE2 FE3 FE4 FE5 FE6 FE7 FE8 FE9 FE10 FE11 FE12
Employee Service
Feelings
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Table 5.2: Construct Measures used in the Online Survey - Continued Construct
Self-Image Congruence
Label
SI1 SI2 SI3 SI4 CC1 CC2 CC3 CC4 CC5 CC6 UC1 UC2 UC3 UC4 UC5
The image of this airline is consistent with my own self-image Flying with this airline reflects who I am People similar to me use this airline The kind of person who typically flies with/uses this airline is very much like me I like the advertising and promotions of this airline I react favorably to the advertising and promotions of this airline I feel positive toward the advertising and promotions of this airline The advertising and promotions of this airline are good The advertising and promotions of this airline do a good job I am happy with the advertising and promotions of this airline Publicity about this airline has been significant in affecting my views of this airline Publicity about this airline revealed some things I had not considered about this airline Publicity about this airline provided some different ideas regarding this airline Publicity about this airline really helped me formulate my ideas about this airline Publicity about this airline influenced my evaluation of this airline The opinion of my friends/family has been significant in affecting my views of this airline My friends/family mentioned some things I had not considered about this airline My friends/family provided some different ideas regarding this airline My friends/family really helped me formulate my ideas about this airline My friends/family influenced my evaluation of this airline I am very satisfied with the service provided by this airline This airline does a good job of satisfying my needs The service provided by this airline is very satisfactory I believe that flying with this airline is usually a very satisfying experience I made the right decision when I decided to use this airline Overall I think this airline is very good Overall I think this is a nice airline Overall I think this airline is very attractive Overall I think this airline is desirable Overall I think this airline is extremely likeable I am likely to use this airline in the future I am likely to recommend this airline to others If I were to make the same trip another time, I would choose this airline again If it were available for my trip, this airline would be my first choice I consider myself to be loyal to this airline
Controlled Communications
Publicity
Word-of-Mouth
UC6 UC7 UC8 UC9 UC10
Satisfaction
SA1 SA2 SA3 SA4 SA5 BA1 BA2 BA3 BA4 BA5 BL1 BL2 BL3 BL4 BL5
Brand Attitude
Brand Loyalty
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5.5. Model Specification The Service Brand Loyalty (SBL) model (Fig. 3.5) is conceptualized as a structural equation model that consists of unobservable latent variables which link brand loyalty with its antecedents or determinants. Based on the overall objective of this thesis, the focus of the SBL framework is on predicting and explaining brand loyalty as the outcome of a consumers evaluation of a service brand by providing crucial information about the importance of various service brand dimensions (i.e. brand evidence) and communication variables (i.e. brand hearsay). Generally speaking, the constructs involved in the model are seen as latent since they are not directly observable and hence they are operationalized by a set of manifest or measurement variables (Fornell et al., 1996). In this respect, the actual survey questions serve as indicators to measure the underlying latent constructs. Furthermore, a distinction has to be made between the structural and the measurement model. Whereas the former refers to the relationships among the latent variables themselves, the latter is associated with linking the manifest variables (i.e. indicators) with its respective latent constructs (Jarvis et al., 2003). Within the SBL framework, the structural model comprises five key constructs (i.e. brand evidence, brand hearsay, satisfaction, brand attitude and brand loyalty) and their expected interrelationships have been specified by the hypotheses (H1-H7) underlying the empirical investigation of this study (Section 3.3). In this respect, satisfaction, brand attitude, and brand loyalty are modeled as first-order constructs which are directly measured by multiple indicators. On the other hand, brand evidence and brand hearsay are conceptualized as second-order latent constructs which are not directly related to any manifest variables but which are operationalized by their underlying first-order facets (Bruhn et al., 2008). Such higher-order constructs have been referred to as mega concepts that consist of a number of interrelated dimensions (Cheung, 2008; Law et al., 1998) and their existence and application in the marketing literature is quite common (Jarvis et al., 2003). In the SBL model, the service brand dimensions (band name, price, core service, employee service, servicescape, feelings, self-image congruence) and the communication variables (controlled communication, WOM, publicity) are understood as first-order dimensions of their respective higher-order latent constructs, namely brand evidence and brand hearsay, and hence serve as their indicators (Law et al., 1998). Since one of the
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objectives of this thesis is to examine the relative strength of the relationship between brand evidence and its distinct service brand dimensions, the conceptualization of second-order constructs seems to be particularly appropriate (Cheung, 2008). When referring to the relation between manifest variables and their corresponding latent constructs, an important distinction has to be made between reflective and formative measurement models due to the fact that they differ in their direction of causation and further estimation method (Diamantopoulos & Winklhofer, 2001). While formative indicators are seen as causing and defining its underlying latent construct, it is the construct itself which causes its respective manifest variables in a reflective measurement model (Jarvis et al., 2003; Diamantopoulos & Winklhofer, 2001). In that case, reflective indicators are manifestations of their latent construct which are expected to share a common theme and thus be interchangeable (i.e. correlation). As such, the direction of causality in a reflective measurement model flows from the construct to the indicators (i.e. a change in the construct causes a change in the indicators). In contrast, formative measures are not assumed to be caused by a single underlying construct and consequently the direction of causality is from the indicators to the latent construct. In this respect, the manifest variables in a formative measurement model need not share a common theme and do not have to be correlated. Since formative indicators are seen as defining characteristics of their construct, dropping any of the measures may alter the conceptual domain of the latent variable (Chin, 1998; Coltman et al., 2008; Jarvis et al., 2003). Based on these differences, it has been noted that a proper specification of the measurement model is a necessary condition before meaning can be assigned to the analysis of the structural model (Anderson & Gerbing, 1982 in Jarvis et al., 2003). Within the SBL model, all first-order dimensions of brand evidence and brand hearsay as well as the response variables (i.e. satisfaction, brand attitude and brand loyalty) are conceptualized in the reflective mode due to theoretical considerations and the types of indicators used. For example, brand attitude and brand loyalty exist in the form of a consumers deeply held overall disposition or commitment toward a brand and therefore the respective construct is supposed to be reflected by its indicators to the extent that a change in the construct itself should cause changes in all of its corresponding measures. On the other hand, brand evidence and brand hearsay are considered to be compositions of their
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underlying first-order dimensions and they are therefore operationalized in the formative mode. Based on the constructs definitions (see Table 3.4), brand evidence and brand hearsay are formed by their first-order components and, as a result, no single dimension alone can represent the overall construct (Law et al., 1998). In this respect, the service brand dimensions (brand evidence) and the different types of communications (brand hearsay) are grouped under their respective higher-order construct because each represents some portion of it (Law & Wong, 1999). Due to the formative nature of such an underlying reflective first-order, formative second-order model (Type II Model), the various service brand dimensions (e.g. employee service, feelings, servicescape, etc.) also do not necessarily have to share a common theme and hence do not have to be correlated (Jarvis et al., 2003). Keeping in mind that all first-order dimensions are supposed to jointly cause their respective higher-order construct in the formative mode, it is quite intuitive that, for example, the strength or favorability of a consumers association with respect to a firms servicescapes might change without affecting his/her evaluation of the employee service. However, it has to be noted that even though the arrows in the SBL framework point from the dimensions to the second-order constructs (Fig. 3.5), these dimensions are still indicators and are thus distinct from external causes or antecedents of brand evidence and brand hearsay. In its very essence, these dimensions are part of the definition of their higher-order constructs (Law et al., 1998; Law & Wong, 1999)
5.6. Model Estimation & Analysis Based on the underlying conceptualization of the Service Brand Loyalty (SBL) model, it was decided to test the research hypotheses with Structural Equation Modeling (SEM) using Partial Least Squares (PLS). SEM refers to a family of statistical procedures that incorporates and integrates both path analysis and factor analysis by taking account of numerous independent and dependent latent variables which are each measured by multiple indicators and which are connected by paths among them. As a special type of structural equation modeling, PLS is a predictive technique that allows for simultaneously estimating the various hypothesized relationships within the SBL framework (Davis et al., 2008). Based on an outer measurement model and an inner structural model, the PLS algorithm is focused on maximizing the predictive power of the dependent variables by generating
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estimates for the latent constructs that fit into both of these underlying relationships (Cassel et al., 2000; Juhl et al., 2002). Compared to other SEM techniques, PLS offers significant advantages since it avoids the necessity of large samples and because it is also well suited to deal with multicollinearity and skewed distributions (Cassel et al., 2000). When referring to the structure of the Service Brand Loyalty framework, PLS has additionally been shown to be most suitable if the model under investigation is relatively complex (i.e. large number of manifest and latent variables) and if formative constructs are included (Chin & Newsted, 1999 in Wetzels et al., 2009). The latter point is of particular importance to this study since brand evidence and brand hearsay are conceptualized in the formative mode and, as such, none of the other common SEM applications (such as LISREL) would be able to handle these measurement specifications (Grace & OCass, 2005a). Moreover, the predictive nature of PLS makes it the most appropriate statistical technique if we consider that existing research in the field of service branding has been scarce and that the SBL model is thus not fully crystallized yet (Chin & Newsted, 1999 in Wetzels et al., 2009). The program used for the PLS estimation was smartPLS 2.0 M3.
However, it has to be noted that the analytical capabilities of PLS do not allow for the direct estimation of higher-order constructs since these are not directly measured with manifest variables. Therefore, a two-stage approach has been applied in which latent variable scores were initially estimated without the presence of the second-order constructs (brand evidence and brand hearsay) and these scores were subsequently used as indicators in a separate higher-order structural model analysis (Wan et al., 2008). In that case, a model containing only the first-order constructs of the SBL framework has been run in order to validate the measurement model and to obtain construct scores for the dimensions of brand evidence and brand hearsay. After this, the latent variable scores have been used as direct formative indicators for the two second-order constructs in a separate model which has then been estimated to investigate the remaining relationships. As a result, the analysis is not a single simultaneous PLS estimation but is rather conducted in two steps. Such a procedure has previously been applied in Type II (reflective first-order; formative second-order) higher-order models since other methods like the repeated indicators approach are not
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appropriate when estimating formatively specified multidimensional constructs (e.g. Agarwal & Karahanna, 2000; Rai et al., 2006; Wan et al., 2008).
5.7. Data Collection Overall, a survey invitation was sent to around 2.400 student email addresses during a six week period in June and July 2009 with the help of the STUDSURVEY program. Within the emails, students were first introduced to the topic and purpose of the study before they were kindly asked for their cooperation to participate in the survey. Moreover, the emails merely included an invitation in the form of a hyperlink on which respondents had to click in order to get forwarded to the actual online questionnaire thus guaranteeing that it was the students own free will to take part in the research. Although it was not possible to determine which person had already responded to the online survey, a short reminder was sent out after approximately 10 days. This procedure resulted in 226 responses of which three had to be deleted due to the omission of more than 20% of survey questions. As a consequence, a total of 223 completed questionnaires were retained for data analysis which was considered to be acceptable for model estimation based on the rather low sample requirements of PLS. However, it has to be noted that a large number of survey invitations were returned undelivered since various student email addresses were invalid or had already been expired. In a similar way, it has to be expected that numerous emails were not opened and read by the recipients at all because they might have been directly forwarded to their spam folder. As such, it was impossible to calculate the actual response rate and hence the probability of a resulting non-response bias might represent a certain concern with respect to the validity of the findings (Davis et al., 2008). An initial inspection of the survey responses revealed that the number of missing values for all variables was quite small (i.e. <5%) and it was thus decided to treat them with mean replacement before the data was further analyzed with SPSS and smartPLS.
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Part Four: Analysis & Discussion of Research Findings
6. ANALYSIS & DISCUSSION OF RESEARCH FINDINGS

While the methodology in the previous section has outlined and discussed the research methods underlying this study, the following chapter will now present the results from the empirical estimation of the Service Brand Loyalty model in order to address the research questions of this thesis. In this respect, the measurement model of both the first- and second-order constructs will be validated before the PLS results of the structural model are illustrated and discussed. The findings will then be interpreted in direct relation to the theories and frameworks that have been revealed in the literature review and a critical comparison with the results from Grace and OCass (2005a) study will be made. Moreover, the theoretical as well as practical implications resulting from the findings of this research are outlined.
6.1. Sample Characteristics Overall, the survey resulted in 223 valid responses which were based on the information provided by students from the Aarhus School of Business, Denmark. The sample was slightly dominated by female respondents (62.3 %) and participants average age was 24.8 years. Danish nationals accounted for the majority of the sample (61.0 %) while 39.0 % of respondents revealed to be international students. Overall, 68.2 % of the participants either had a part-time job or were employed full-time while about a third of the surveyed students (31.8 %) did not work during the time of the study. With reference to the educational level, it was shown that around half of the respondents (44.8 %) were enrolled in an undergraduate program whereas the other group mostly studied at the postgraduate level (52.0 %). The survey results also seemed to confirm that students are familiar with and make frequent use of the services provided by airlines since 69.5 % of the participants indicated to fly approximately one to five times a year while 30.5 % even mentioned to make more than five flights per annum. The fact that around a third of the participants (41.7 %) thought of a long-distance flight when filling in the questionnaire might let us expect that students did not primarily have low-cost airlines as the focal brand in mind (e.g. Ryan Air). As a consequence, we assume the findings not to be biased towards any specific
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airline segment (i.e. low-cost carrier vs. flag carrier or globally operating long-distance airlines (Lufthansa, SAS, British Airways, etc.)).
Table 6.1: Sample Characteristics (N=223) Demographics

Gender Male Female Nationality Danish International Employment Status Full-time job Part-time job No job Educational Level Undergraduate Postgraduate Other Flying Frequency 1-2 times per year 3-5 times a year More than 5 times a year Type of Flight Short-distance Long-distance
Frequency
84 139 136 87 21 131 71 110 116 7 69 86 68 130 93
Percentage
37.7 % 62.3 % 61.0 % 39.0 % 9.4 % 58.7 % 31.8 % 44.8 % 52.0 % 3.2 % 30.9 % 38.6 % 30.5 % 58.3 % 41.7 %
6.2. PLS Results As previously mentioned, the Service Brand Loyalty model was estimated with a twostage approach based on the fact that brand evidence and brand hearsay were operationalized as second-order constructs that were not directly measured by any indicators (Agarwal & Karahanna, 2000; Wan et al., 2008). Therefore, a model containing only the first-order constructs was analyzed to obtain latent variable scores for the various service brand dimensions and communication variables which were subsequently used as formative indicators in a separate PLS estimation. Moreover, it has often been argued that the validation of the measurement model is a necessary requirement in order to investigate the structural relationships in a meaningful way (Davis et al., 2008; Jarvis et al., 2003). In
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this respect, the analysis of the PLS results will be conducted in two steps: First, the measurement model linking the indicators with their respective latent constructs will be validated by inspecting item reliabilities and validity and, second, the strength of path coefficients among the latent constructs is examined to test the hypothesized relationships. In order to test the significance level of the underlying effects, a bootstrap procedure with 500 samples has been conducted to obtain the critical ratios (t-value > 1.96; p < 0.05) (Wan et al., 2008).
6.2.1. Measurement Model PLS algorithms estimate each latent variable as a weighted average of its respective indicators (Cassel et al., 2000). However, a clear distinction must be drawn between the two types of measurement models. For reflective constructs, the latent variables are similar to principal components of their corresponding indicators and the weights must therefore be understood in terms of their correlations (loadings). In contrast, the weights involved in formative constructs are similar to regression coefficients between the latent variable and its measures. Within the Service Brand Loyalty (SBL) model, all first-order constructs including the dimensions of brand evidence and brand hearsay and the three consumer response variables (satisfaction, brand attitude and brand loyalty) were operationalized in the reflective mode. In this respect, construct validity and individual item reliabilities are appropriate criteria which need to be assessed in order to test if indicators actually measured what they were supposed to measure (Davis et al., 2008; Hulland, 1999; Jarvis et al., 2003). Convergent validity was judged by examining construct loadings and construct reliabilities. Based on the first PLS estimation (Table 6.2), almost all items loaded significantly on their respective latent variable by exceeding the commonly accepted threshold of 0.7 (see also Appendix A) which indicates that indicators measure the same thing and that more than 50% of the variance in the items is shared by their corresponding construct (AVE) (Davis et al., 2008; Jarvis et al., 2003). However, one of the items measuring core service (CS5) had a construct loading of almost zero (0.05) and was thus deleted. Similarly, one indicator from the price/value for money scale (PV4), one from the self-image congruence scale (SI3) and five of the items measuring feelings (FE6, FE7, FE10, FE11, FE12) revealed to have
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loadings lower than 0.7 but since these were still within an acceptable range (0.60-0.63) it was decided to retain the indicators for further analysis (Hulland, 1999). Moreover, convergent validity was proven in terms of internal consistency reliabilities with all Cronbach Alpha estimates being higher than 0.7 and all composite reliability indices being above 0.8 (Hulland, 1999). The average variance extracted (AVE) for each variable was larger than 0.5 and thus also exceeded the recommended parameter value (Davis et al., 2008; Hulland, 1999).
Table 6.2: Convergent Validity and Reliability Construct

Brand Name Price / Value for Money Core Service Employee Service Servicescape Feelings Self-Image Congruence Controlled Communication Word-of-Mouth Publicity Satisfaction Brand Attitude Brand Loyalty
Loadings (Range)
0.81-0.87 0.62-0.94 0.84-0.94 0.75-0.86 0.71-0.82 0.60-0.82 0.62-0.89 0.84-0.93 0.87-0.91 0.78-0.91 0.82-0.94 0.83-0.88 0.70-0.89
Cronbachs Alpha
0.91 0.84 0.92 0.91 0.79 0.91 0.80 0.95 0.94 0.90 0.95 0.91 0.87
Composite Reliability
0.93 0.88 0.94 0.93 0.86 0.93 0.85 0.96 0.95 0.92 0.96 0.94 0.91
AVE
0.73 0.66 0.81 0.64 0.62 0.51 0.60 0.79 0.81 0.70 0.82 0.74 0.67
While the above results indicate satisfactory convergent validity, it still has to be tested if measures of a given latent variable effectively discriminate between measures of other latent variables (discriminant validity). In this respect, indicators should load more strongly on their corresponding construct than on any other construct (i.e. item loadings should be higher than cross-loadings) and the average variance shared between the construct and its indicators (AVE) should be larger than the variance shared between the construct and any other construct (Agarwal & Karahanna, 2000; Hulland, 1999). An inspection of the crossloadings revealed that almost all items correlated most strongly with their intended
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construct than with any other thus indicating acceptable discriminant validity. Similarly, Fornell and Larcker (1981 in Davis et al., 2008) propose that the test for discriminant validity is met when the square root of the average variance extracted for a given construct is greater than its correlation with other constructs. As can be seen in Table 6.3, except of one case the shared variance among indicators of a latent variable (square root of AVE; bold-faced elements on the diagonal) is higher than the variance shared between latent variables (inter-construct correlations; off-diagonal elements) and hence signals further proof of adequate discriminant validity.
Table 6.3: Discriminant Validity

Construct Brand Name (BN) Price / Value for Money (PV) Core Service (CS) Employee Service (ES) Servicescape (SS) Feelings (FE) Self-Image Congruence (SI) Controlled Communication (CC) WOM (WOM) Publicity (PUB) Satisfaction (SA) Brand Attitude (BA) Brand Loyalty (BL) BN 0.85 0.01 0.16 0.24 0.18 0.21 0.29 0.28 0.12 0.26 0.12 0.21 0.23 0.81 0.47 0.42 0.40 0.47 0.27 0.33 0.12 0.23 0.64 0.53 0.56 0.90 0.59 0.50 0.68 0.39 0.35 0.16 0.09 0.69 0.67 0.48 0.80 0.50 0.64 0.38 0.37 0.16 0.10 0.59 0.63 0.39 0.79 0.47 0.34 0.34 0.02 0.12 0.51 0.54 0.34 0.71 0.29 0.30 0.05 0.12 0.72 0.70 0.50 0.77 0.44 0.28 0.37 0.40 0.47 0.36 0.89 0.14 0.40 0.42 0.50 0.38 0.90 0.40 0.14 0.17 0.20 0.84 0.21 0.21 0.30 0.91 0.78 0.66 0.86 0.62 0.82 PV CS ES SS FE SI CC WOM PUB SA BA BL
Note: Bold-faced elements on the diagonal represent the square root of the variance extracted. Off-diagonal elements are inter-construct correlations. For adequate discriminant validity, the elements in each row and column should be smaller than the bold-faced elements in that row or column.
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Based on the loadings that resulted from this first PLS estimation, latent variable scores (i.e. composite scores) for the first-order dimensions of brand evidence and brand hearsay were computed and subsequently used as formative indicators of their respective constructs in a second PLS run (two-stage approach). As such, the hypothesized relationships within the structural model as well as the weights connecting the service brand dimensions and communication variables with their respective constructs were analyzed. The means of the resulting first-order composite scores (scored on a 7-point Likert scale) ranged from 3.48 for word-of-mouth to 5.46 for core service and the standard deviations varied between 0.93 for servicescapes and 1.54 for WOM. As specified in the Service Brand Loyalty (Fig. 3.5) framework, the second-order measurement model linking brand evidence and brand hearsay with its corresponding dimensions is conceptualized in the formative mode since these lower-order facets are expected to jointly form their respective latent construct (Jarvis et al., 2003). However, in contrast to reflective indicators, formative measurement models do not assume that measures are caused by a single underlying dimension thus illustrating that the assessment of construct validity and reliability in the sense of internal consistency is not meaningful for such specifications (Diamantopoulos & Winklhofer, 2001). Therefore, the quality and suitability of items in formatively measured constructs must rather be assessed by considering content and indicator specification, indicator multicollinearity and external validity (Diamantopoulos & Winklhofer, 2001). With respect to content specification, both of the formative second-order constructs had previously been defined in Table 3.4 in order to clearly identify and delimit the scope and breadth that they intend to capture. Because measures jointly determine a construct within a formative measurement model rather than vice versa, content specification is strongly linked with indicator specification which refers to the adequate and sufficient operationalization of latent variables. In that case, formative constructs should be measured by items which are capable of addressing the constructs entire scope (Diamantopoulos & Winklhofer, 2001). In the underlying study, brand hearsay, for example, has been defined as representing all brand communications that are experienced by the consumer in the prepurchase stage of decision-making. Based on an extensive literature review, these communications were found to involve publicity, WOM and advertising/promotion and, consequently, all of these three dimensions were measured with multiple items in the
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survey thereby assuring appropriate content and indicator specification. Moreover, the multicollinearity among indicators has been highlighted as an important issue particularly for formative measurement models since the existence of excessive multicollinearity would make it difficult to separate the distinct effect of individual items on their respective latent construct (Diamantopoulos & Winklhofer, 2001). However, multicollinearity among formative indicators did not appear to be a major concern in this study. The maximum variance inflation factors (VIF) for the dimensions of brand evidence and brand hearsay revealed to be 2.19 and 1.36 and were thus far below the commonly accepted cut-off threshold of 10 (Diamantopoulos & Winklhofer, 2001). As previously mentioned, a latent variable specified in a formative mode is determined by its indicators and hence the elimination of insignificant items must be questioned from a theoretical perspective since such a procedure would most likely change the whole scope of the construct. Nevertheless, the external validity of formative measurement models might be assessed within a larger nomological net by examining the strength and significance of the weights connecting indicators with their corresponding construct (Diamantopoulos & Winklhofer, 2001). The second PLS run (two-stage approach) integrated both brand evidence and hearsay and the three consumer response variables (i.e. satisfaction, brand attitude and brand loyalty) in a single model and simultaneously estimated the structural (inner) relationships as well as the measurement (outer) relations. For formative indicators, the weights are similar to regression coefficients and can thus be interpreted as the importance of the individual item for the composition or formation of its respective latent construct. The results from the PLS estimation are illustrated in Table 6.4 and highlight that brand evidence is significantly determined by the dimensions price/value for money, core service, employee service, servicescape, feelings and self-image congruence. Likewise, a firms controlled communications revealed to strongly contribute to the brand hearsay construct. On the other hand, brand name as well as WOM and publicity were not found to be significant (t-value<1.96; p>0.05) for the conceptualizations of their corresponding secondorder constructs.
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Table 6.4: Weights for Formative Dimensions of Brand Evidence and Hearsay Construct
Brand Evidence
Dimension
Brand Name Price / Value for Money Core Service Employee Service Servicescape Feelings Self-Image Congruence
Weights
0.05 0.27* 0.27* 0.17* 0.13* 0.30* 0.23* 0.96* 0.20 -0.02
t-value
0.91 3.40 3.30 2.21 2.23 4.27 4.26 14.08 1.73 0.13
Brand Hearsay
Controlled Communication WOM Publicity
Note: * Indicates significance (t-value>1.96; p<0.05)
6.2.2. Structural Model The structural model refers to the relationships among the latent constructs and the estimation of the path coefficients connecting them thus allows for the investigation and test of the first five hypotheses (H1-H5) underlying this study. The results from the PLS estimation are graphically depicted in Figure 6.1 and are additionally summarized in Table 6.5 and Table 6.6.
Table 6.5: Results of the Structural Model Predicted Variable

Satisfaction
Predictor Variable
Brand Evidence Brand Hearsay H1 H3 H2 H4 H6 H7 H5
Hypothesis
Supported Not supported Supported Supported Supported Supported Supported
Path
0.79* 0.04 0.42* 0.15* 0.38* 0.62* 0.49*
t-value
15.91 0.79 6.44 3.24 6.11 13.86 8.16
R2
0.65
Brand Attitude
Brand Evidence Brand Hearsay Satisfaction
0.70
Brand Loyalty Brand Evidence
Brand Attitude Brand Hearsay
0.38 0.24
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Fig. 6.1: SBL Model with PLS Results
Overall, the findings appear quite promising to the extent that all except one (H3) of the seven hypothesized relationships have been confirmed through the existence of statistically significant path coefficients (p<0.05). In this respect, the suggested consumer response process has been supported by strong effects from satisfaction on brand attitude (0.38) and, in turn, from brand attitude on brand loyalty (0.62). Moreover, it has been revealed that a consumers satisfaction with a service brand is mainly based on the brands dimensions (0.79) while brand-related communications were not found to significantly influence brand evidence. On the other hand, both brand hearsay (0.15) and brand evidence (0.42) jointly affect consumers overall attitudes toward the branded offering. When referring to the endogenous latent variables in the Service Brand Loyalty model, the results show that 65 % of the variance in satisfaction, 70 % of the variance in brand attitude and 38 % of the variance in brand loyalty has been explained by the underlying framework (i.e. R2). Although a strong relationship was found between brand hearsay and brand evidence (0.49),
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indicating that brand-related communications might shape a customers perception of the various service brand dimensions, the explained variance in the brand evidence construct (R2=0.24) should be considered with care. This is because, from a theoretical point of view, the variance in a formatively measured latent variable is supposed to be fully accounted for by its indicators (Diamantopoulos et al., 2008). Taking both the direct and indirect effects into consideration (Table 6.6), it also becomes apparent that brand loyalty as the ultimate variable in the SBL model is not only influenced by brand attitude but moreover to a significant extent by brand evidence (0.44) and brand hearsay (0.31) while satisfaction has a somewhat lower effect (0.23).
Table 6.6: Total Effects in the SBL Model Construct

Brand Hearsay Brand Evidence Satisfaction Brand Attitude
Brand Evidence
0.49
Satisfaction
0.43 0.79
Brand Attitude
0.51 0.71 0.38
Brand Loyalty
0.31 0.44 0.23 0.62
6.3. Discussion of Findings The first research question of this thesis was concerned with the investigation of those service brand dimensions that are actually meaningful to consumers when evaluating branded services and the results from the Service Brand Loyalty model clearly offer some answers regarding this issue. Overall, it was shown that all except one of the hypothesized service brand dimensions (i.e. brand name) were important for consumers decision-making and brand evaluation. Based on the findings, core service (0.27), value for money (0.27), feelings (0.30) and self-image congruence (0.23) were those brand components that were most important for consumers perception of their chosen brand. For example, the strong weight attributed to the price/value for money dimension might highlight that customers always consider a service in terms of what they will get for what they have to sacrifice. Moreover, the price of a service is one of the few tangible attributes that can already be judged and assessed by the user prior to purchase and, as such, the perception of a good value for money could significantly impact on a consumers further behavior and decision-
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making. In this way, previous research has often shown that prices strongly shape customers perception of service quality (Dodds et al., 2001). However, this finding might also be exaggerated by the fact that the results were based on a student sample thus highlighting that the price of an offering would always play a particularly crucial role. Besides such a rather tangible service element, the results of the SBL model clearly revealed that brand evidence was mainly accounted for by those brand dimensions that are experienced by the consumer during the consumption stage. This is not surprising given the intangible nature of services and it also confirms the notion of Berry (2000) who assumed a customers brand image to be disproportionately shaped by its direct experience with the service brand. In its very essence, services involve an experience that is different from the purchase of a tangible good, and this assumption has strongly been supported by the underlying results. A service brands core service and employee service are both attributes that can only be assessed during consumption and these make a significant part of the brand evidence construct which might be in accordance with the general conceptualization of service quality consisting almost exclusively of dimensions that can only be determined during or after consumption (Parasuraman et al., 1985). Given the fact that the core service refers to the fundamental process of the offering (e.g. transportation from A to B), it is not surprising that this dimension is of crucial importance to a service user and this would obviously similar to a physical good. However, due to the inseparability of services, the interaction between the consumer and the provider becomes a key element of service delivery and thus service users see the employee service dimension as an important part of a brands evidence. Moreover, the feelings aroused during experience as well as the congruence of a users self-image with respect to the image of the brand are critical components of a service brands dimensions. Due to the fact that services are experiential in nature and that their provision takes a certain amount of time, it seems to be particularly important for consumers the feel good when receiving a service which might be quite different from the purchase of physical products. Similarly, these feelings might be related to the self-image dimensions meaning that, overall, customers want to feel in a pleasant environment with people similar to the user being present at the time of service consumption. A companys physical facilities also appeared to be an important brand dimensions for consumers satisfaction on further behavior thus illustrating that the
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servicescapes are a crucial means for tangibalizing a service offering in order to have consumers easily assess a companys quality. Surprisingly, brand name was the only brand dimension not being important to consumers perception and evaluation of a service brand. This might either be explained by the underlying brand stimuli indicating that airlines are just not good at establishing strong brand names or it might be based on the fact that a brand name, in the end, is still a name and as such it is no guarantee of superior quality. The heterogeneity of services might also impact on these findings by highlighting that the quality of service experiences, unlike the one for standardized goods, can vary from day to day and from one occasion to the next. As a result, a brand name might be important for a firm but it does not assist the consumer if the experience of a service delivery is inconsistent to a large extent. With respect to the brand hearsay construct, the findings revealed that a companys controlled communications are an important source of information to the customer. On the other hand, both WOM and publicity where not found to be significant however this might be based on the fact that all respondents in the survey had previously experienced the chosen brand first-hand. As such, it might nevertheless be expected that, for instance, personal sources of communication are important for new or unfamiliar consumers. The following research questions of this thesis dealt with effects among the latent variables themselves and, in this respect, all except one of the hypothesized relationships had been supported by this study. Overall, the result also seem to strongly confirm the earlier findings by Grace and OCass (2005a) which might emphasize that there are indeed certain effects and influences that could be common the service sector as a whole instead of merely being relevant to specific service industries or brands. In very broad terms, brand loyalty was shown to be strongly affected by a consumers brand attitude which, in turn, was determined by satisfaction as well as both brand evidence and brand hearsay. The powerful relationships between the dimensions of a service brand (brand evidence) and satisfaction and brand attitude clearly emphasize that is mainly a brands tangible and intangible attributes which result in consumers satisfaction and favorable attitudes towards the brand. In this respect, the dimensions experienced by the consumer during the consumption stage together with the price/value for money component are the most important elements affecting consumer evaluation of and response to a service brand.
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Moreover, the strong link between brand evidence and satisfaction seems to support the idea that satisfaction should be understood as the result of a customers post-purchase evaluation of service attributes. While brand hearsay did not significantly impact on users satisfaction with the service band, it nevertheless influenced brand attitude directly thus indicating that a firms controlled communications can strongly shape a consumers overall disposition toward a brand. This is also true for brand evidence which illustrates that the dimensions of a service brand are not only compared to users pre-purchase expectations (i.e. satisfaction) but they moreover and directly cause a consumers overall brand attitude. Finally, a strong link was found between a firms communications and a users perception of the various brand attributes. This clearly highlights that advertising and promotions shape customers perception of the brand evidence and, as a consequence, controlled communications must be seen as a powerful instrument for marketers in affecting consumers brand evaluation and behavior. As a summary, the total effects presented in Table 6.6 reveal that a consumers degree of brand loyalty, as the ultimate behavioral variable, is not only strongly influenced by customers overall disposition toward a brand but moreover it is significantly affected by both brand evidence and brand hearsay. This highlights that a companys advertising as well as a brands tangible and intangible dimensions jointly impact on consumers attitudinal and behavioral response.
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6.4. The Effects of Brand Familiarity & Consumer Involvement Having analyzed and discussed the findings of the SBL model estimation, the next step was to investigate the potential moderating effects of brand familiarity and consumer involvement in order to address the last two hypotheses (H8 and H9) underlying this study. In order to do so, the two scales were initially subjected to a factor analysis which confirmed that all items loaded significantly on their respective factor. For brand familiarity, all indicator loadings were larger than 0.9 and the Cronbach Alpha estimate was 0.93. Similarly, the two dimensions of the involvement scale (Alpha: 0.87) have been supported with almost all items loading strongly on their respective factor. Based on this assessment, indicators of each scale were summated to compute construct scores which were then split into three groups of roughly equal size. The groups with the highest and lowest scores were categorized as low/high familiarity (N=65/N=81) and low/high involvement (N=72/N=75) segments and were retained for a further investigation of moderation effects.
Table 6.7: Brand Familiarity and Consumer Involvement Construct

Brand Familiarity
Indicator
Familiarity Experience Knowledge
Factor Loading
0.92 0.94 0.94 0.78 0.86 0.88 0.80 0.74 0.55 0.88 0.68 0.88 0.88
Cronbachs Alpha
0.93
Involvement
Important Needed Relevant Means a lot to me Valuable Involving Exciting Appealing Fascinating interesting
0.87
Overall, the results were rather disappointing to the extent that almost no significant differences were found between the different familiarity and involvement groups. In this respect, the general structure of the Service Brand Loyalty model was almost identical to all
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samples regarding the relationships among the latent constructs itself. For all four groups (i.e. low involvement; high involvement; low familiarity; high familiarity), the same hypotheses were confirmed as with the full sample thus indicating that a consumers degree of brand familiarity and involvement did not significantly impact on the way in which service users respond to and behave towards brands. As a consequence, the last two hypotheses (H8 and H9) were not or only partly supported by the underlying study. In that case, the process by which a customer makes sense of and responds to a service brand was found to be similar for all four groups illustrated in the respective SBL models by a strong effect from brand evidence to satisfaction and brand attitude, a strong influence of brand hearsay on brand evidence and by strong paths running from satisfaction to brand attitude and, in turn, from brand attitude to brand loyalty. While this might reveal that brand familiarity and involvement do not affect the relationships among the key constructs in the model, it nevertheless gives additional support for the other hypothesized effects among the variables. However, it might still be assumed that these results not necessarily indicate that the degree of brand familiarity and involvement have no moderating effects at all but rather that these effects could not be examined due to the characteristics of the sample. For instance, an analysis of the respondents revealed that almost all participants scored high on the three items of the familiarity scale thus illustrating that respondents as a whole belonged to a high familiarity group. As a result, splitting the sample into two or three parts will still not be able to effectively discriminate between different familiarity groups and hence even those respondents classified as being the low familiarity group are actually pretty familiar with the brand. This, however, is a constraint attributed to the sample and does not mean that personality characteristics have no influence on the way in which consumers evaluate and respond to service brands. Rather, these influences could not be investigated based on the properties of the underlying sample to not contain both high and low familiarity cases, and this result might in essence be the same for the involvement scale. Thus, further research definitely has to address such issues given the fact that the literature has suggested a multitude of moderation effects that are supposed to strongly impact on the way consumers perceive, evaluate and respond to market offerings.
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Generally speaking, the estimation of the SBL model for both the high familiarity and high involvement group has resulted in path coefficients and weights that are highly similar to the results for the full sample and hence these two groups will not be discussed but their effects are illustrated in Appendix B and C. The low familiarity and low involvement group, on the other hand, revealed some differences that might be interesting to outline in relation to the results from the earlier SBL model estimation with the full sample. For ease of comparison, the path coefficients and formative weights for the low involvement group are illustrated in Fig. 6.2 and Table 6.8 and results for the low familiarity group are graphically depicted in Fig.6.3.
Fig. 6.2: SBL Model Results for the Low Involvement Sample
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Table 6.8: Weights for Formative Dimensions Low Involvement Sample Construct
Brand Evidence
Dimension
Brand Name Price / Value for Money Core Service Employee Service Servicescape Feelings Self-Image Congruence
Weights
0.11* 0.24* 0.31* 0.21* 0.01* 0.38* 0.30* 0.94* 0.30* 0.12
t-value
3.02 6.28 5.34 3.75 2.24 6.81 6.95 17.12 3.01 0.89
Brand Hearsay
Controlled Communication WOM Publicity
With reference to the full sample estimation of the SBL model, it turns out that the effects for the low involvement groups differ to a certain extent. For instance, the analysis has shown that brand name now becomes a significant dimension of brand evidence thus highlighting that consumers who are not so interested in a service per se might rely on tangible cues to infer specific quality levels already prior to actual purchase. Similarly, this is also true for WOM communications which were shown to significantly impact on consumers decision-making for those characterized by a rather low level of personal interest in the service. On the other, publicity revealed to be an important source of information to the low familiarity consumers besides the strong contribution of controlled communications. This highlights that users with a small amount of previous experience might also rely on other sources of information than merely on a companys advertising and promotions. Surprisingly, the results also revealed that the core service of a service brand was not important unfamiliar consumers brand perception. However, feelings and selfimage congruence were shown to significantly contribute to brand evidence for the low familiarity group thus potentially indicating that consumers rather focus on those service brand dimensions that they can assess during consumption since other brand attributes might be difficult to be judged due to users lack of experience and knowledge.
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Fig. 6.3: SBL Model Results for the Low Familiarity Sample
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Part Five: Conclusion
7. CONCLUSION
By addressing the underlying objectives of this study, the previous chapter has presented and discussed the research findings based on the analysis of the Service Brand Loyalty model. Although these results have significantly improved our understanding of the relationship between service users and their brands, there are nevertheless certain limitations that need to be considered. In this respect, the final section will now highlight these limitations and outline the extent to which they might constrain the interpretation of the findings. Moreover, some guidelines for further research will be given. Finally, the last part will reflect on the empirical investigation of this thesis and summarize its key results in light of the previous work in the field of service branding.
7.1. Limitations and Further Research No study comes without limitations and this was not different for the underlying research. First and foremost, it has to be noted that the Service Brand Loyalty model was investigated on the basis of a specific brand stimuli, namely airlines, and hence the application of the findings might not be applicable to other service settings. However, theory generalizability is a common limitation if the research was dependent on a single industry. On the other hand, the results appear to strongly confirm and support earlier studies in the field of service branding such as Grace & OCass (2005a) investigation of supermarkets and banking services as focal service brands and, as a consequence, certain similarities have emerged that might let us assume that these findings could be universal to the service industry as a whole. In this respect, further research should explore the key constructs of this study in various other service settings by specifically focusing on those types of services that possess distinct criteria or qualities than the ones investigated previously. For example, no research has so far addressed services that are high in credence attributes such as highly professional services which are difficulty to assess by consumers even after purchase and consumption. The airline product, per se, is an offering that is not consumed on a very regular basis and thus findings might similarly differ with respect other service types. This is also true if we consider that airlines might be understood as services
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with a rather high degree of tangibility based, for instance, on the importance of the physical facilities such as the aircraft itself. More research is required in order to fully understand how consumers make sense of and behave towards service brands, especially in light of the fact that services themselves were shown to vary to a large extent thus making further investigations into the topic of service branding a crucial necessity. In terms of theory generalizability considerations, it also has to be noted that the underlying research was based on the responses given by a student sample which has often been criticized for not being representative of the population. Although it can be expected that airline services are of interest and relevance to students and other younger people, such a sample still represents a quite homogeneous group which does not possess the properties of a truly random sample and hence the results might be biased to a certain extent. More importantly, the moderating effects of brand familiarity and consumer involvement were difficult to assess in the underlying study and this might be due to the fact that students did not successfully discriminate with respect to these personality characteristics. Keeping in mind that the existing literature proposes several significant moderation effects of familiarity and involvement on consumers decision-making and behavior, further research should try to incorporate such considerations within their methodology. Therefore, the use of a more representative sample and a rather heterogeneous group would be beneficial to further theory elaboration and testing. Besides the limitations that directly address the problem of the generalizability of research findings to other service settings, there are moreover some constraints regarding the methodological conceptualization of the Service Brand Loyalty model itself. For example, the second-order constructs brand evidence and brand hearsay had been specified in the formative mode based on the argumentation that they were believed to be jointly formed by their underlying first-order dimensions. While this might appear intuitive and be correct, such a formative conceptualization nevertheless requires the perfect determination of the constructs by their respective indicators or dimensions. As such, an extensive literature review has been conducted and it was consequently suggested that the seven service brand dimensions and the three communication variables included in the Service Brand Loyalty model are adequate to account for the brand evidence and brand hearsay constructs. However, specifying formative latent variables in such a way that their domain
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is fully exhausted by their indicators is always questionable since there might still be factors relevant to the construct. In that case, it has to be noted that there might be specific service environments or service offerings for which previously not addressed dimensions could become particularly important with respect to a consumers ultimate brand evaluation or response (e.g. attitude, loyalty). Thus, further research has to be careful in examining the full range of potential service brand dimensions (brand evidence) and communication variables (brand hearsay) that might be meaningful and important in a specific service brand setting before estimating the relationships within the Service Brand Loyalty framework. Overall, this thesis has been highly beneficial to our understanding of service consumers evaluation of and response to brands. However, further research that replicates and extends the main findings of this study in new and diverse service settings by simultaneously addressing the potential moderating role of consumer characteristics (e.g. brand familiarity) is a key priority.
7.2. Conclusion Based on the huge lack of research in the field of service branding, this study suggested the Service Brand Loyalty model as a conceptualization to understand how consumers evaluate and respond to service brands. Acknowledging the importance to understand branding from the consumers point of view, this thesis estimated the SBL model with customer-based information obtained from a sample of Danish university students. With respect to the first research question underlying this study, the results revealed that all except one of the hypothesized service brand dimensions significantly contributed to users perceptions of a service brand and, in turn, impacted on their behavior in the form of satisfaction, brand attitudes and brand loyalty. More specifically, core service, price, feelings and self-image congruence were shown to be the most important brand dimensions for consumers decision-making. Based on the experiential nature of services, the findings indicated that those brand dimensions that can only be assessed by the customer after or during consumption were the most crucial ones. Especially the feelings aroused during service delivery and the users self-image congruence turned out to be powerful brand associations in the consumers mind. Besides brand evidence, the findings also revealed
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that a companys controlled communications are an important source of information to the consumer. On the other hand, WOM and publicity were not found to be significant, however, this might be explained by the fact that all respondents had previously experienced the focal brand first-hand thus indicating that personal sources of communication, for example, might still be important for new or unfamiliar customers. The next research questions were concerned with the relationships among the key constructs in the SBL model. In that case, the results revealed that brand loyalty is mainly explained and affected by a customers favorable attitude toward the brand. However, both the service brand dimensions (brand evidence) and controlled communications (brand hearsay) significantly influence customers future behavior. Moreover, brand attitude is a direct antecedent of brand loyalty and is strongly affected by satisfaction, brand evidence and, to a lesser degree, band hearsay. Satisfaction, in this respect, must be understood as the result of a consumers post-purchase evaluation of a service brands dimensions compared to the previously held expectations. As such, a brands tangible and intangible attributes strongly determine users satisfaction with the brand. What is interesting to note is that brand hearsay strongly shapes a consumers perception of the service brand dimensions thus stressing the powerful role of marketer-controlled communications in influencing customers sartisfaction as well as overall brand attitude and loyalty. However, this also implies that marketing communications are subject to a critical examination by the user (sartisfaction judgment) and thus should not make promises that cannot be kept during actual service consumption/production. The last research question addressed the hypothesized moderation effects of brand familiarity and involvement, however, based on the underlying sample almost no differences were found between the high/low familiarity and involvement groups. This might still indicate the potential effect of moderators but these could not be investigated by the underlying sample.
Overall, the results clearly confirmed the findings of previous studies in the field of service branding by highlighting the importance of similar service brand dimensions and by revealing similar attitudinal and behavioral relationships among the key variables involved. As a result, this study has successfully validated previous research findings in a new and
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quite different service setting. Moreover, it has significantly helped our understanding of the way by which service users makes sense of and evaluate service brands and, in turn, how these brand evaluations impact on consumers ultimate behavior. Thus, the findings provide crucial insight for both academics as well as service marketers who would like to benefit from and capitalize on the value of branding within a service environment.
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88
Appendix
APPENDIX A
Measurement Model Results Outer Loadings
Construct
Brand Name
The name of this airline tells me a lot about what to expect from this airline The name of this airline tells me a lot about this airline The name of this airline means something to me The name of this airline sends a message to me about this airline The name of this airline tells me everything I need to know about this service This airlines services are reasonably priced This airline offers satisfactory value for what it costs This airline provides a good service for the price Using this airline is economical The facilities of this airline, both at the airport and on the airplane itself, suit my needs This airlines physical facilities, both at the airport and on the airplane itself, are visually attractive This airlines employees have a neat and well-dressed appearance The appearance of the physical facilities of this airline, both at the airport and on the airplane itself, is in accordance with the type of service provided The core service provided by this airline suits my needs The core service provided by this airline is reliable I can rely on this airline to provide good core service This airline provides quality core service I receive prompt attention from this airlines employees Employees of this airline are always willing to help me The employees of this airline are never too busy to respond to my requests I can trust the employees of this airline I feel safe in my transactions with this airlines employees Employees of this airline are polite Employees of this airline give me personal attention When flying with this airline I feel annoyed (reverse scored) When flying with this airline I feel happy When flying with this airline I feel irritated (reverse scored) When flying with this airline I feel frustrated (reverse scored) When flying with this airline I feel pleased When flying with this airline I feel sad (reverse scored) When flying with this airline I feel disgusted (reverse scored) When flying with this airline I feel uneasy (reverse scored) When flying with this airline I feel good When flying with this airline I feel nervous (reverse scored) When flying with this airline I feel confident When flying with this airline I feel impressed
Loading
0.86 0.85 0.81 0.90 0.84 0.75 0.94 0.90 0.62 0.80 0.82 0.71 0.81 0.84 0.93 0.93 0.89 0.80 0.86 0.83 0.81 0.75 0.80 0.76 0.79 0.72 0.80 0.81 0.78 0.59 0.61 0.74 0.82 0.60 0.67 0.60
Price / Value for Money
Servicescapes
Core Service
Employee Service
Feelings
89
Appendix
Construct
Self-Image Congruence
The image of this airline is consistent with my own self-image Flying with this airline reflects who I am People similar to me use this airline The kind of person who typically flies with/uses this airline is very much like me I like the advertising and promotions of this airline I react favorably to the advertising and promotions of this airline I feel positive toward the advertising and promotions of this airline The advertising and promotions of this airline are good The advertising and promotions of this airline do a good job I am happy with the advertising and promotions of this airline Publicity about this airline has been significant in affecting my views of this airline Publicity about this airline revealed some things I had not considered about this airline Publicity about this airline provided some different ideas regarding this airline Publicity about this airline really helped me formulate my ideas about this airline Publicity about this airline influenced my evaluation of this airline The opinion of my friends/family has been significant in affecting my views of this airline My friends/family mentioned some things I had not considered about this airline My friends/family provided some different ideas regarding this airline My friends/family really helped me formulate my ideas about this airline My friends/family influenced my evaluation of this airline I am very satisfied with the service provided by this airline This airline does a good job of satisfying my needs The service provided by this airline is very satisfactory I believe that flying with this airline is usually a very satisfying experience I made the right decision when I decided to use this airline Overall I think this airline is very good Overall I think this is a nice airline Overall I think this airline is very attractive Overall I think this airline is desirable Overall I think this airline is extremely likeable I am likely to use this airline in the future I am likely to recommend this airline to others If I were to make the same trip another time, I would choose this airline again If it were available for my trip, this airline would be my first choice I consider myself to be loyal to this airline
Loading
0.84 0.89 0.62 0.71 0.89 0.84 0.89 0.92 0.88 0.93 0.78 0.80 0.81 0.91 0.87 0.87 0.90 0.91 0.91 0.90 0.94 0.94 0.93 0.90 0.82 0.88 0.86 0.83 0.88 0.87 0.86 0.89 0.84 0.79 0.70
Controlled Communications
Publicity
Word-of-Mouth
Satisfaction
Brand Attitude
Brand Loyalty
90
Appendix
APPENDIX B
Results for the High Involvement Sample
The SBL Model for the High Involvement Sample
91
Appendix
APPENDIX C
Results for the High Familiarity Sample
The SBL Model for the High Familiarity Sample
92

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Department of Marketing and Statistics Master Thesis, Final Semester

Service Branding from the Consumer's Point of View

An examination of the effects of service brand dimensions on brand loyalty

Aarhus School of Business August 2009

Part One: Introduction

Part One: Introduction

Part One: Introduction

Part One: Introduction

Part One: Introduction

How do service brand dimensions affect consumers brand loyalty?

Part One: Introduction

Part One: Introduction

Part One: Introduction

Fig. 1.1: Structure of the Thesis

Research Hypotheses Part Three: Methodology Construct Measurement Model Specification

Part Five: Conclusion Recommendations Limitations Future Research

Part Two: Literature Review

2. THE PRINCIPLES OF BRANDING

Part Two: Literature Review

Part Two: Literature Review

Fig. 2.1: The Double Vortex Brand Model

(Source: Adapted from de Chernatony & DallOlmo Riley, 1998)

Part Two: Literature Review

Fig. 2.2: The Brand Knowledge Construct

(Source: Adapted from Keller, 1998)

Part Two: Literature Review

Part Two: Literature Review

3. SERVICE MARKETING & BRANDING

Part Two: Literature Review

Part Two: Literature Review

Part Two: Literature Review

Fig. 3.1: The Goods-Services Continuum

(Source: Adapted from Zeithaml, 1981 in Friedman & Smith, 1993)

Part Two: Literature Review

Part Two: Literature Review

Part Two: Literature Review

Table 3.1: Determinants of Service Quality Determinant

Part Two: Literature Review

Part Two: Literature Review

Part Two: Literature Review

Part Two: Literature Review

Part Two: Literature Review

Part Two: Literature Review

Core product/service Feelings Experience with brand

Self Image congruence Image of user Employees

(Source: Adapted from Grace & OCass, 2002)

Part Two: Literature Review

Table 3.2: Brand Dimensions of Services Service Brand Dimensions

Part Two: Literature Review

Part Two: Literature Review

Fig. 3.3: The Service Brand Equity Model

(Source: Adapted from Berry, 2000)

Part Two: Literature Review

Part Two: Literature Review

Table 3.3: Comparison of Brand Dimensions

(Source: Adapted from Grace & OCass, 2005a)

Part Two: Literature Review

Fig. 3.4: The Service Brand Verdict Model

(Source: Adapted from Grace & OCass, 2005a)

Part Two: Literature Review

Fig. 3.5: The Service Brand Loyalty Model

Part Two: Literature Review

Part Two: Literature Review