5th International Consumer-Brand Relationship Conference Customer Brand Engagement, Satisfaction and Brand Loyalty: A Comparative Study between Functional and Emotional Brands Mariana Moreira Teresa Fernandes 5th International Consumer-Brand Relationship Conference Porto, May 18-20, 2017

Research Background Understanding how consumers engage with and become loyal to brands is a topic of great importance in Marketing (Keller, 2012) For several decades, researchers have considered satisfaction fundamental to brand loyalty (Kandampully et al., 2015) However, nowadays customers are co-owners and co-creators of brands, and so customer brand engagement (CBE) has a growing role in building customer-brand relationships and an emotionally loyal customer base

Research Background Customer brand engagement (CBE) has been defined as a customer’s cognitive, emotional, behavioral, co-creative investment while interacting with brands (Hollebeek et al., 2014) While CBE refers to a relational, multidimensional concept, satisfaction is conceptualized as a transaction-specific judgement, linked to the expectancy disconfirmation paradigm (Carrol & Ahuvia, 2006) However, the contribution of CBE vs satisfaction to brand loyalty is yet to be analyzed through empirical research 3

Given the limitations of previous research, our aim is twofold: Research Background The nature of customer-brand relationships – primarily functional or emotional – may be important to understand the predictive power of CBE vs satisfaction on brand loyalty. Different customer-brand relationships may lead to different levels of CBE (Dessart et al. 2016, Simon et al., 2016). However research so far has been inconclusive on which type of brands are more conductive of CBE: though some brands may have limited potential to engage customers (namely functional brands), CBE may not be limited to high-involvement, emotional categories (Bergkvist & Bech-Larsen, 2010; Hollebeek et al., 2014; Vivek et al., 2014). Given the limitations of previous research, our aim is twofold: to understand differences in CBE according to the functional or emotional nature of consumer-brand relationships to compare CBE and satisfaction as predictors of brand loyalty, considering the two types of consumer-brand relationships 4

FUNCTIONAL vs EMOTIONAL BRANDS Research Framework Attention is focused on testing the following hypothesis: FUNCTIONAL vs EMOTIONAL BRANDS H1 H3 H2 H1: Significant differences exist on CBE and its dimensions (cognitive, affective, behavioral) according to the type of consumer-brand relationship developed (functional vs emotional) H2: CBE has a positive impact on Brand Loyalty (BL) H3: The type of consumer-brand relationship developed (functional vs emotional) moderates the impact of CBE and Satisfaction on BL 5

Research Methodology Data Collection A cross-sectional survey was applied to two independent samples. To get meaningful results (Fetscherin et al. 2014), respondents were asked to recall a brand with which they had a functional relationship (Sample 1) or an emotional relationship (Sample 2), according to the definition supplied by the researchers Respondents then completed the survey based on the self-selected brand The causal model (SEM) was tested using SPSS-AMOS Constructs were measured based on multi-item scales established in previous research (Yoo & Donthu 2001, Hollebeek et al. 2014, Dwivedi, 2015), assessed in a 7-point Likert scale and included: 15 questions measuring the 3 dimensions of CBE (cognitive, affective, behavioral) 5 questions measuring Brand Loyalty 4 questions measuring Satisfaction Data collection sorted 655 valid answers (Sample 1: 320; Sample 2: 335) The majority of respondents were women (72%), predominantly between the ages of 16 and 34 years old (78%), with a bachelor (40%) or master degree (28%).

Research Methodology Data Collection FUNCTIONAL CONSUMER-BRAND RELATIONSHIP When the consumer primarily values the brand for its functional role, associated with objective benefits, such as efficiency or reliability, and inherent characteristics of brand attributes (e.g. price, design, quality). When the consumer primarily values the brand for its symbolic benefits, for the social desirability of the brand and its self-expressive value, which satisfy consumer’s high level needs and engage them in additional meaningful ways. EMOTIONAL CONSUMER-BRAND RELATIONSHIP 7

Research Findings Data analysis results I think a lot about [brand] Research Findings Data analysis results .809 [Brand] stimulates my interest .760 COGNITIVE DIMENSION When I use [brand] I forget everything .786 We define CBE as a second, higher-order construct (Hollebeek et al., 2014) measured reflectively by its three first-order dimensions (cognitive, affective, behavioral). The three dimensions are expected to jointly reflect the underlying construct at the second order. .843 Time flies when I interact with [brand] .902 [Brand] inspires me .835 I am proud of using [brand] .885 AFFECTIVE DIMENSION .945 CBE I use [brand] with total dedication .781 .857 Using [brand] makes me happy .831 I feel enthusiastic about [brand] .824 I spend a lot of time using [brand] .731 [Brand] is one I often use in [category] .813 BEHAVIORAL DIMENSION χ2 (48) = 197,574 p < 0.00 (χ2/df = 4,116, CFI = 0.972, TLI = 0.954, RMSEA = 0.069) Whithin [category] I always use [brand] .842 .738 I feel like using [brand]

Research Findings Data analysis results H1: Significant differences exist on CBE and its dimensions (cognitive, affective, behavioral) according to the type of consumer-brand relationship developed (functional vs emotional) t Sig. (2-tailed) Mean difference (F-E) COGNITIVE DIMENSION -8.194 0.000* -.66835 CBE and its dimensions present higher values for emotional vs functional brands (p<0.000) AFFECTIVE DIMENSION -11.978 0.000* -.92019 BEHAVIORAL DIMENSION -4.871 0.000* -.41253 CBE -9.926 0.000* -.78926 9

Research Findings Data analysis results H2: CBE has a positive impact on Brand Loyalty (BL) H3: The type of consumer-brand relationship (functional vs emotional) moderates the impact of CBE and Satisfaction on BL COGNITIVE DIMENSION I would recommend [brand] R2=.45 H2 I will buy [brand] again  = .68 BRAND LOYALTY CBE AFFECTIVE DIMENSION I will not buy another brand I am faithful to [brand] I am committed to [brand] H3 BEHAVIORAL DIMENSION FUNCTIONAL BRANDS  = .650 The impact of CBE on BL is higher for emotional vs functional brands (p<0.05) < EMOTIONAL BRANDS  = .696 10

Research Findings Data analysis results H3: The type of consumer-brand relationship (functional vs emotional) moderates the impact of CBE and Satisfaction on BL COGNITIVE DIMENSION SAT2 SAT3 R2=.94 SAT4 SAT1  = .09 BRAND LOYALTY  = .91 CBE SATISFACTION AFFECTIVE DIMENSION The impact of CBE on BL is higher for emotional vs functional brands (but n.s.) CBE SAT BEHAVIORAL DIMENSION FUNCTIONAL BRANDS  = .080  = .942 < > The impact of SAT on BL is lower for emotional vs functional brands (p<0.1) EMOTIONAL BRANDS  = .116  = .861 11

Conclusion Discussion, Contributions and Originalty/Value So far, research was inconclusive on which brands are more conductive of CBE. And to the best of our knowledge, no quantitative study on the impact of specific brand types on CBE has been developed. Addressing recent research calls (Dessart et al. 2016), our results validate CBE as a three- dimensional construct, stronger for emotional than functional brand-relationships. Thus, though CBE can be extended to “mundane” brands (Vivek et al., 2014), consumers tend to feel more engaged with brands with which they have a primarily emotional connection. The affective dimension of CBE reported the highest difference.

Conclusion Discussion, Contributions and Originality/Value Furthermore, this study adds to the existing body of knowledge by comparing the contribution of CBE vs Satisfaction to Brand Loyalty (BL) according to the nature of consumer-brand relationships, with important implications for brand managers. Though Satisfaction, traditionally regarded as fundamental to BL, plays a major role, the effect of CBE on BL was still significant, and more importantly it was stronger for emotional brands (while the impact of satisfaction proved to be significantly stronger for functional brands). When satisfaction is increasingly becoming a basic requirement of being in the game, our study shows that CBE adds to the variance of Brand Loyalty explained by Satisfaction as a significant predictor, particularly when brands are able to develop an emotional relationship with the consumer (“love brands”). Thus, for brand managers, CBE may represent a competitive advantage, particularly if focus is given to the symbolic benefits of the brand and to brand “meaningfulness”, instead of merely focusing on price or quality. 13

Conclusion Research Limitations and Suggestions for Future Research The study characterized consumer-brand relationships as functional vs emotional. However, other dimensions can be considered. (Fournier, 1998; Keller 2012) Brands were self-selected by respondents, which may not facilitate generalizations and encompass some research bias, as well as the convenience sample used. Since CBE is context-dependent, future research could develop a comparative analysis in e.g. online vs offline settings or products vs services. 14

Thanks for your attention! tfernandes@fep.up.pt School of Economics and Management – University of Porto R. Dr. Roberto Frias 4200-464 Porto Portugal Telef: +351 225 571 100 Fax: +351 225 505 050 www.fep.up.pt Thanks for your attention! Questions?

Research Findings Data analysis results COGNITIVE DIMENSION ß.68 BRAND LOYALTY CBE AFFECTIVE DIMENSION BEHAVIORAL DIMENSION 16