Generally, higher brand equity ends up with higher market share and higher profitability. However, superior brand equity does not guarantee the success in the market. That is, consumer choice is closely related to brand equity but we need more than brand equity to explain this complex phenomenon. We adopt the customer equity concepts: value equity, brand equity, and retention equity. By incorporating value equity and retention equity into customer equity, it is possible to avoid the problems of using the brand equity only. In the paper, we apply this customer equity concepts to cellular phone and investigate the effects of antecedent variables such as exposure, knowledge, positive experience and negative experience on the components of customer equity. In addition, as surrogate measure of customer lifetime value, the weighted measure of purchase intention, consideration set inclusion, and next purchase is used as dependent variable. We estimate the effects of components of customer equity at the brand level and aggregate level using SURE model. Estimation results show that Apple has currently low market share but has high future potentials and Korean firms have currently high market share but has rather low future potentials.
Proceedings of the Korean Operations and Management Science Society Conference
/
2008.10a
/
pp.218-233
/
2008
This study reveals how corporate CRM activities can influence organizational performance by integrating CRM process with customer equity drivers, which have been regarded as independent research areas. The results show that the customer equity drivers including value, brand, and relationship equity mediate between CRM processes and organizational performance. In more detail, customer acquisition, retention, and expansion have positive relationships with brand, relationship, and value equity, respectively. Moreover, even though all customer equity drivers influence organizational performance positively, our analysis suggests that relationship equity has the strongest effect on it.
One of the recent research trends that universities are increasingly adopting the concept of 'customer' and the customer-oriented strategy has urged us to research enterprise-wide CRM strategy adaptable to university administration. As the first step of CRM strategy for university management, we try to validate the difference of CRM strategic factors among university types. Drawing upon both CRM process and customer equity drivers, which have been recognized as core frameworks for CRM strategy, we developed those survey instruments adoptable into university industry, and validated statistically-significant difference among 12 types of university group constructed by the levels of university evaluation and the location of the universities. We collected 261 responses from 177 universities from all over the country and analyzed the data to see the levels of CRM processes consisting of customer acquisition, retention, and expansion, and customer equity drivers consisting of value equity, brand equity, and relationship equity by using multivariate ANOVA(MANOVA). The result confirms the explicit differences of the levels of CRM processes and customer equity drivers between the groups by university evaluation levels(high/middle/low). However, the analysis failed to show the significant differences of those between the group by university locations(the capital/the suburbs/the six megalopolises/other countries). More specifically, the level of activities for customer acquisition and retention of the universities in the higher-graded group are significantly different from those in the lower-graded group from the perspective of CRM process. In terms of customer equity drivers, the levels of both brand equity and relationship equity of the higher-graded group are significantly higher than those of both middle and lower-graded group. In addition, we found that the value equity between the higher and lower-graded groups, and the brand equity between the middle and lower-graded groups are different each other. This study provides an important meaning in that we tried to consider CRM strategy which has been mainly addressed in profit-making industries in terms of non-profit organization context. Our endeavors to develop and validate empirical measurements adoptable to university context could be an academic contribution. In terms of practical meaning, the processes and results of this study might be a guideline to many universities to build their own CRM strategies. According to the research results, those insights could be expressed in several messages. First, we propose to universities that they should plan their own differentiated CRM strategies according to their positions in terms of university evaluation. For example, although it is acceptable that a university in lower-level group might follow the CRM process strategy of the middle-level group universities, it is not a good idea to imitate the customer acquisition and retention activities of the higher-level group universities. Moreover, since this study reported that the level of universities' brand equity is just correlated with the level of university evaluation, it might be pointless for the middle or lower-leveled universities if they just copy their brand equity strategies from those of higher-leveled ones even though such activities are seemingly attractive. Meanwhile, the difference of CRM strategy by university position might provide universities with the direction where they should go for their CRM strategies. For instance, our study implies that the lower-positioned universities should improve all of the customer equity drivers with concerted efforts because their value, brand, and relationship equities are inferior compared with the higher and middle-positioned universities' ones. This also means that they should focus on customer acquisition and expansion initiatives rather than those for customer retention because all of the customer equity drivers could be influenced by the two kinds of CRM processes (KIm and Lee, 2010). Surely specific and detailed action plans for enhancing customer equity drivers should be developed after grasping their customer migration patterns illustrated by the rates of acquisition, retention, upgrade, downgrade, and defection for each customer segment.
Journal of the Korea Society of Computer and Information
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v.18
no.10
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pp.225-234
/
2013
The purpose of this study is to evaluate the impact of airline's retention equity on customer positive exclusive behavior intention and to minimize customer churn based maintenance is aimed to derive key variables in air transport market. A survey was conducted Incheon and Gimpo airport to use in the national carrier of domestic air travelers. A total of 480 respondents completed a survey. The result reveal that loyalty program, preferential treatment & acknowledgement program, and community program have significantly effect on positive behavior intention. However, preferential treatment & acknowledgement program, and community program have significantly effect on exclusive behavior intention. It showed that they are more influence than loyalty program as a switching barrier of airlines. The academic and practical implication of this study has been identified in the competitive market to maximize customer retention factors of maintaining retention equity to derive empirical strategic priorities.
Journal of the Korean Operations Research and Management Science Society
/
v.35
no.1
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pp.1-17
/
2010
This article addresses how an organization's customer relationship management (CRM) process affects customer equity drivers and, in turn, organizational performance. By raising a three-staged model including the CRM processes, customer equity drivers, and organizational performance, the authors assert that the customer equity drivers mediate between the CRM processes and organizational performance. The empirical analysis is based on a composite survey structure that gathers data from different types of informants according to the variables. Findings indicate that the expansion process has positive relationship with all the customer equity drivers. However, the acquisition process significantly influences both perceived value equity and brand equity, and the retention process significantly influences relationship equity only. In addition, the study shows that all the customer equity drivers influence the organizational performance given the existing customers. The relationship equity among the customer equity drivers has the strongest effect on the performance.
This study empirically examines the synergy effect of a corporate-level loyalty program on customer equity (CE) known as the lifetime value of current and future customers (Blattberg et al. 2009). A corporate-level loyalty program refers to a company-wide integration loyalty program at the corporate-level in which subsidiaries (multi-divisions) participate as program members. It does not merely examine whether there is an integration effect of a corporate-level loyalty program from the CE perspective, but it provides practical implications for a firm's strategic focus by identifying which value creation channels (i.e., acquisition, retention, and cross-selling), brand characteristics (i.e., size of the customer base before integration, diversity of products, and sales channel type), and consumer characteristics (i.e., customer relationship stage, transaction amount before integration, transaction period, and number of purchased brands) are affected the most by the synergy effect.
Purpose - The objective of this paper is to suggest that a company's CRM activities have an effect on customer loyalty in the Korean retail industry. Typically, Korean customers use large local marts with convenience in the absence of any other choice. Therefore, this study aims to shed light on the fact that customers do not break away from their preferred retail stores, either owing to their stringent loyalty (the lie loyalty) or difficulty in turning to alternative choices. Research design, data, methodology - By surveying a sample of 200 hyper-markets through a questionnaire, and excluding dubious and missing responses, I obtained 181 samples to be included in the empirical analysis. The survey was conducted for two weeks during October 2011. AMOS and SPSS18 statistical packages were used for conducting statistical analysis for this study. This paper was developed using the concept of customer equity on CRM, which is known to have a positive impact on customer loyalty through the satisfaction and switching-barrier parameters. The hypothesis of this paper is that customer equity is composed of relationship equity, value equity and brand equity, and that the relationship equity variable has positive effects on the value equity and brand equity amongst other types of customer equity. Moreover, customer equity influences customer loyalty through parameters including customer satisfaction and switching costs in the Korean retail industry. Results - According to the results of the analysis, it was confirmed that relationship value had a positive effect (+) on all variables, including the perceived QoS (Quality of Service), store brand images, economic value, and store convenience. It was also confirmed that the assumption that the perceived QoS (Quality of Service), economic value, and store convenience had a positive effect on customer satisfaction was shown to be statistically significant, with a p-value below 0.05. Only the store brand value variable had an effect on the switching-cost variable with respect to the causal sequence of the variables, including the perceived QoS, store brand value, economic value, and store convenience. The remaining variables did not seem to influence the switching-cost variable. On the other hand, another effect showed that customer satisfaction had a statistically significant influence on the switching-costs variable. Moreover, the customer satisfaction and switching-cost variables also had a statistical influence on customer loyalty. Conclusions - The CRM activities had an influence on various variables (including perceived QoS, perceived economic value, store brand value, and store convenience) pertaining to customer values. Customer satisfaction and switching-cost had some effects on customer loyalty as a parameter. This confirms that stringent loyalty exists with respect to customer loyalty in the retail industry. The fact that the variable had such a statistically significant influence on the switching-cost and store brand equity variables means that consumers react to the reputation of a brand, confidence about the store, and quality confidence. The implications of this study in the retail industry should be further extended to devise strategies for customer retention.
Service failure is one of the major reasons for customer defection. As the business environment gets tougher and more competitive, a single service failure might bring about fatal consequences to a service provider or a firm. Sometimes a failure won't end up with an unsatisfied customer's simple complaining but with a wide-spread animosity against the service provider or the firm, leading to a threat to the firm's survival itself in the society. Therefore, we are in need of comprehensive understandings of complainants' attitudes and behaviors toward service failures and firm's recovery efforts. Even though a failure itself couldn't be fixed completely, marketers should repair the mind and heart of unsatisfied customers, which can be regarded as an successful recovery strategy in the end. As the outcome of recovery efforts exerted by service providers or firms, recovery of the relationship between customer and service provider need to put on the top in the recovery goal list. With these motivations, the study investigates how service failure and recovery makes the changes in dynamics of fundamental elements of customer-firm relationship, such as customer affection, customer trust and loyalty intention by comparing two time points, before the service failure and after the recovery, focusing on the effects of recovery satisfaction and the failure severity. We adopted La & Choi (2012)'s framework for development of the research model that was based on the previous research stream like Yim et al. (2008) and Thomson et al. (2005). The pivotal background theories of the model are mainly from relationship marketing and social relationships of social psychology. For example, Love, Emotional attachment, Intimacy, and Equity theories regarding human relationships were reviewed. As the results, when recovery satisfaction is high, customer affection and customer trust that were established before the service failure are carried over to the future after the recovery. However, when recovery satisfaction is low, customer-firm relationship that had already established in the past are not carried over but broken up. Regardless of the degree of recovery satisfaction, once a failure occurs loyalty intention is not carried over to the future and the impact of customer trust on loyalty intention becomes stronger. Such changes imply that customers become more prudent and more risk-aversive than the time prior to service failure. The impact of severity of failure on customer affection and customer trust matters only when recovery satisfaction is low. When recovery satisfaction is high, customer affection and customer trust become severity-proof. Interestingly, regardless of the degree of recovery satisfaction, failure severity has a significant negative influence on loyalty intention. Loyalty intention is the most fragile target when a service failure occurs no matter how severe the failure criticality is. Consequently, the ultimate goal of service recovery should be the restoration of customer-firm relationship and recovery of customer trust should be the primary objective to accomplish for a successful recovery performance. Especially when failure severity is high, service recovery should be perceived highly satisfied by the complainants because failure severity matters more when recovery satisfaction is low. Marketers can implement recovery strategies to enhance emotional appeals as well as fair treatments since the both impacts of affection and trust on loyalty intention are significant. In the case of high severity of failure, recovery efforts should be exerted to overreach customer expectation, designed to directly repair customer trust and elaborately designed in the focus of customer-firm communications during the interactional recovery process to affect customer trust rebuilding indirectly. Because it is a longer and harder way to rebuild customer-firm relationship for high severity cases, low recovery satisfaction cannot guarantee customer retention. To prevent customer defection due to service failure of high severity, unexpected rewards as a recovery will be likely to be useful since those will lead to customer delight or customer gratitude toward the service firm. Based on the results of analyses, theoretical and managerial implications are presented. Limitations and future research ideas are also discussed.
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