Academic journal article Journal of Business Strategies

Brand Loyalty and Store Loyalty for Consumers Purchasing a Product Warranty in a Health Care Setting: An Investigation of the Differences across Gender, Age, and Income Groups

Academic journal article Journal of Business Strategies

Brand Loyalty and Store Loyalty for Consumers Purchasing a Product Warranty in a Health Care Setting: An Investigation of the Differences across Gender, Age, and Income Groups

Article excerpt

ABSTRACT

The product warranty plays an increasingly important role in today's highly competitive marketplace. The use of warranties is widespread, but their use has only relatively recently been applied in the health care sector. This study will look at the different levels of brand loyalty and store loyalty for respondents who were grouped by demographic characteristics. The demographics were divided into two groups: male/female, high income/low income, and younger/older. The respondents consisted of 120 patients at a privately-owned and operated, single-outlet, retail optical center. The two groups were compared based on brand loyalty and store loyalty using independent-samples t-tests. The analysis revealed that younger patients who purchase the warranty are more brand loyal than older patients who purchase the warranty. Additionally, patients with higher incomes were significantly more store loyal than patients with lower incomes.

Keywords: product warranty, healthcare, brand loyalty, store loyalty

INTRODUCTION

Although retailers have offered warranties to customers for more than a century, it is only relatively recently that other sectors, including health care, have started offering warranties as a marketing tool (Ostrom & Iacobucci, 1998). Product warranties provide value to purchasers of durable products by insuring against product failure. This can increase customers' perception of product reliability and the health care provider's reputation, which increases their confidence in the purchase decision.

Competition has intensified in the health care and other professional service industries (Hart, Schlesinger, & Maher, 1992). Professional service organizations are constantly attempting to achieve a competitive advantage and are searching for ways to differentiate themselves from the competition (Falkenreck & Wagner, 2011; Oumlil, 2008). Warranties enable a firm to gather useful data about customer concerns, satisfaction, and dissatisfaction about services in ways that traditional consumer surveys may not be able to do (Levy, 1999). Usually the organization does not receive negative feedback until a consumer is completely dissatisfied and exercises the warranty. Furthermore, service warranties are an effective way to recruit and retain customers. Finally, the service warranty helps the organization build consumer loyalty, trust, and satisfaction (Kennett-Hensel, Min, & Totten, 2012; Levy, 1999), with a potential increase in profitability.

Several health care providers have offered warranties for their products, ranging from home blood pressure monitors (PR Newswire, 1998) and hearing aids (Shumaker, 2002), to services, including bypass surgery (Bush, 2007) and Lasik laser eye surgery (PR Newswire, 2007). Delta Dental Plan, a dental insurance provider, experienced an increase in its retention rate from 97 percent to 99 percent, an increase worth $19 million annually as a direct result of a service warranty on several aspects of its service (Hart, Schlesinger & Maher, 1992).

Opticians have also offered warranties for their products, including contact lenses (The Optician, 2007; Business Wire, 1999), prescription sunglasses (The Optician, 2007), traditional frames (The Optician, 2005), and rimless lenses (The Optician, 2006). This study will assess the effectiveness of an eyeglass warranty based upon brand loyalty and store loyalty.

LITERATURE REVIEW AND HYPOTHESES

Warranty Definition and Theory

By definition, a warranty is a contractual agreement between a manufacturer (seller) and a consumer (buyer), requiring the manufacturer to address any failure(s) that occur during the warranty period (Oumlil, 2008; Jack & Van Der Schouten, 2000). Similarly, "a warranty is assurance that the supplier of an item will back the quality of the item in terms of correcting any legitimate problems with the item at no cost for a particular period of time or use" (Cope, Folse, & Cope III, 1999, p. …

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