The Effect of Brand Image on Public Relations Perceptions and Customer Loyalty

By Hung, Chia-Hung | International Journal of Management, June 2008 | Go to article overview

The Effect of Brand Image on Public Relations Perceptions and Customer Loyalty


Hung, Chia-Hung, International Journal of Management


The present study seeks to contribute to the development of a conceptual framework that integrates customer perceived public relations, brand image and customer loyalty. Empirical findings based on a survey of 367 consumers with insurance experience in the Taiwan region demonstrate that Public relations perception is positively affects brand image, which in turn affects customer loyalty. Furthermore, the direct effect of brand image on customer loyalty is stronger than that of public relations perception. Management implications of these findings and suggestions for future research are subsequently discussed.

Introduction

How to develop, maintain, and enhance customer's loyalty toward a firm's products or services is generally seen as the central thrust of marketing activities (Dick and Basu, 1994). Higher customer loyalty implies a higher market share and an ability to demand relatively higher prices as compared with those of competitors (Chaudhuri and Holbrook, 2001 ). This increased customer loyalty can also help lower marketing costs, solicit more customers, and effectively operate trading leverage (Aaker, 1997). Additionally, loyal customers foster positive word-of-mouth promotion and defy competitors' strategies (Dick and Basu, 1994) and generate higher corporate profits (Fornell and Wernerfelt, 1988; Reichheld et al., 2000). These results establish an organization's most reliable success indicators (Zeithaml et al., 1996). However, what are the factors influencing consumer loyalty? The antecedent factors of customer loyalty have been discussed extensively in the service marketing literature (e.g., value, service quality, relationship marketing, corporate image, satisfaction, trust), but less empirical attention has been paid to the effects of public relations perceived by customer , this is especially valid in the service industry, because differentiation through the delivery channel is difficult and similarity increasingly, therefore this study aims to clarify the relationship between public relations and customer loyalty because environmental changes have led businesses to move through different orientations - from product to marketing to societal orientation (Kitchen, 1996), and thus highlighting the importance of public relations.

The present study seeks to contribute to the development of a conceptual framework that integrates customer perceived public relations, brand image and customer loyalty. The purposes of this study are (1) to analyze the relationship between the practice of public relations and brand image, and (2) to analyze the relationship between brand image and customer loyalty, and (3) to assess the mediating effect of brand image in public relations perception (PRP) and customer loyalty.

Literature Review and Hypotheses

Figure 1 graphically displays the research model underlying our study. We propose three sets of relationships. First, there is a positively relationship between public relations perception and brand image. second, there is a positively relationship between brand image and customer loyalty. Third this relationship is mediated by brand image. We present below the literature review and the hypotheses developed.

Cutlip et al. (1985) defined public relations as "the management function that identifies, establishes, and maintains mutually beneficial relationships between an organization and the various public on whom its success or failure depends." Moreover, according to a summary of empirical results from several studies, consumer perception of these organization-public relationships would influence their satisfaction evaluations, behavioural intent and actual behaviour. Such a result is evident in school-student relationships (Bruning and Ralston, 2001 ; Hon and Brunner, 2001 ; Bruning, 2002) and bank-customer relationship (Bruning, 2000; Bruning and Ledingham, 2000) where the customers that stay possess a higher level of PR perception and satisfaction as compared with those that leave. …

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