The Effect of Brand Image on Online Service Failure
-- Basing on Mainland China Online Retailing
Jun-feng Liao 1, Lin-lin Zhong2
1
2
School of Economics and Commerce, South China University of Technology, Guangzhou, China
School of Economics and Commerce, South China University of Technology, Guangzhou, China
(1 ljf@scut.edu.cn, 2zllzippies@gmail.com)
Abstract - The research focuses on the issue of service
failures in online shops, and moderate effect of brand image
on customer repurchase intention. This paper integrates the
theories of service failure, perceived service quality and
other related theories, proposes the concept of perceived
service failure, and study how online retailer’s brand image
affect customer repurchase intention after service failure.
Keywords - online service failure, SERVQUAL, repurchase
I.
THE POSING OF QUESTIONS
According to 2010-2011 the Study of China’s Online
Shopping User Behavior by IResearch, more than half of
Chinese users have been dissatisfied with the online
shopping experience in 2010. This shows that online
service failure is widespread presents a growing tendency.
Online service failure will lead to consumes’ negative
emotions and running off. Developing new customers and
maintaining old customers are the issues that the site needs
to concern in the fierce competition. It is difficult and
costly to develop new customers. Therefore, it is valuable
and significant to developing repurchase customer.
With the intense competition of E-commerce, races
among online retailers are not limited on technology,
product and service but upgraded to soft power such as
brand image, customer relationships and so on. Brand
image is the overall perception to a brand that customers
hold, it ’ s a key factor of brand equity （ XiuCheng
Fan&Jie Chen, 2002 ） [1]. Park, Jaworski&MacInnis （
1986） [2] point out that brand image communication to the
target market has always been regarded as an important
activity of marketing. Disseminating a well-defined brand
can help enterprise to distinguish itself from competitors（
Reynolds&Gutman,1984 ） [3]. A good brand image can
decrease customers’ selection risk, establish confidence
to purchase and help to foster the identity of the enterprise.
Many scholars have found that brand image have great
impact on customer purchase behavior, but the studies of
its effects on service failure are very few.
II.
LITERATURE REVIEW
A. Customer Reponse following Online Service Failure
Forbes etc.（2005） [4] found that after experiencing a
service failure, the online consumer repurchase intention
will reduce regardless of what kind of service recovery
they took. Harris ect. （ 2006 ） [5] compared online
consumers’ responses to service recovery with traditional
ones. The results showed that the satisfaction of online
consumer is higher than that in the traditional areas under
the situation of low level service recovery. Taiwan
scholars Ying-Feng Kuo act（2011） [6] studied service
failure and recovery in online auction and found that no
matter what kinds of recovery the company took, it is
difficult to increase consumer repurchase intention.
B. Brand Image
Brand image is the overall perception to a brand that
customers hold, it is a key factor of brand equity
（XiuCheng Fan、Jie Chen, 2002） [1]. Previous studies
about brand image discuss its impact on customer
purchasing behavior and customer loyalty. Derbaix(1983)
[7]
points out that customer will purchase products with
higher reputation as a strategy of reducing risk.
Degeratu(1999) [8]found that customers’ online brand
loyalty is higher than that of traditional ones. ShengRu
Huang & Sheng-Ju Huang (2009) [9] studied the
relationship of organic rice brand image and customer
perceived risk, and found that the higher the brand image ,
the lower risk customer perceived.
Most of the previous studies focus on the definition and
classification of the service failure itself. Research on
service failure can be supplemented in the following
aspects: after experiencing service failure, consumer will
have a perception about the service failure. On the research
of customer perception and behavior, most scholars sought
reasons from failure itself. During the process of service
delivery, there are other factors may have impact on
customer perception. Further discussion on this aspect is
meaningful. Previous studies have shown that brand image
significantly affect customer purchase intention and
customer loyalty. How brand image affect customer
perception and behavior after service failure?
III.
RESEARCH DESIGN
A. Variable select
This study is to use SEM in quantitative study. Basing
on previous researches and combining many studies, this
theme is to set 7 variables as follow: Perceived service
failure, perceived loss, perceived service quality, trust, and
satisfaction, repurchase intention, brand image.
XinHong Liang（2006） [10] believes that it belongs to
service failure if the customer identified it regardless of
whether service providers made that mistakes. This article
proposed the concept of perceived service failure, measure
it from the following three aspects: whether it’s a failure
or not, the severity of failure, how much responsibility the
company should take. Gronroos（1984） [11] pointed out
that service failure will bring consumers 2 kinds of loss:
economic loss and emotional loss. Xin Li ect.（2006） [12]
divided it into economic loss and social loss. Carol, Carol
Xiaojuan Ou（2009）[13]thought that e-commerce trust is
the consumers ’ expectation of an acceptable way of
transaction take by the seller and able to fulfill the
promised goods and services. Hampel （ 1977 ） [14]
believes that customer satisfaction is the result of
consistency of "expected service performance" with
"actual service performance". Jones, Suh （ 2000 ） [15]
points out that repurchase intention is the willingness that
consumer will still buy the products next time after they
used it. Derbaix(1983) [7] points out that customer will
purchase products with higher reputation as a strategy of
reducing risk. Degeratu(1999)[8] found that customers’
online brand loyalty is higher than that of traditional ones.
B. Hypotheses
H1: Perceived Service failure and perceived loss are
positive correlation;
H2: Perceived loss and perceived service quality are
negative correlation;
H3: Perceived loss and satisfaction are negative
correlation;
H4: Perceived loss and trust are negative correlation;
H5: Perceived service quality and satisfaction are
positive correlation;
H6: Perceived service quality and trust are positive
correlation;
H7: satisfaction and trust are positive correlation;
H8: Satisfaction and repurchase intention are positive
correlation;
H9: Trust and repurchase intention are positive
correlation.
H10: Brand image has a moderate effect on customer
perception and behavior.
IV.
A. Tentative Investigation
Initial questionnaire has been finished basing on
previous study and opinion by concerned experts.
Questionnaires were sent to students of Bachelor degree
and Master degree in Guangzhou, Shenzhen and SCUT.
179 effective questionnaires were recycled. The credibility
and validity of this investigation matched with
identification index. Meanwhile, according to feedback,
some exposition modes have been changed to gain a
formal questionnaire finally.
B. Formal Investigation
Formal investigation is sampling survey in enterprise,
commercial district and college in Guangzhou and
Shenzhen. 850 questionnaires have been sent and 784 were
recycled. 732 of them are effective with 86.11% effective
rate. Ineffective questionnaire index contains: 1,
unfinished, 2, more than 80% of the answers are the same.
Among all the samples, both male are 315 taking 43% of
them and female are 417 taking 57% of the total amounts.
427 of them are students, taking 58%. 305 of them are
employees, taking 42%. Most of investigators are among
18 to 35, taking 94% of the investigators. 87% of them
have income among 1500 to 3000 per month. Comparing
with reports by many Authoritative organizations, the
sample-feature is considered to be reasonable.
C. Reliability and Validity
Basing on the reliability and validity analysis with SPSS
16, the result shows that Cronbachpsαis between 0.837 and
0.955. The entire Cronbachpsα is 0.911, so that the
questionnaires have a good reliability and reasonable
design. This theme used SPSS 16.0 to analyze the validity
of samples. The result is as follow: KMO is among 0.703
to 0.817 and the entire KMO has reached 0.908. And
Bartlett’s statistical value is lower than 0.001, which
means the hypothesis for sphericity was refused. It also
means this data has a very high degree of correlation so it
is fit for factor analysis.
D. Structural Equation Model Testing
This theme use AMOS 17.0 to test the hypothesis.
The result of AFI、IFI and PFI are all match up with
index. It shows that the model has good fitting effect and
can do the following analysis.
TABLE I.
AFI
Figure I.
INVESTIGATION DESIGN
RESEARCH MODEL
IFI
RESULTS OF STRUCTURAL EQUATION MODEL TESTING
Model Fit
Standard
X2/df
RMSEA
GFI
AGFI
NFI
TLI
CFI
Ideal
Result
<2.00
<0.05
>0.90
>0.90
>0.90
>0.90
>0.90
Model
1.950
0.035
0.966
0.950
0.982
0.988
0.991
Degree of
Compliance
Yes
Yes
Yes
Yes
Yes
Yes
Yes
PFI
IFI
RFI
PNFI
PGFI
PCFI
CN
>0.90
>0.90
>0.50
>0.50
>0.50
>200
0.991
0.975
0.723
0.644
0.730
476
Yes
Yes
Yes
Yes
Yes
Yes
E. Path Analysis
As Table 2 shows, in those 9 hypotheses, 8 of them are
supported for they are in significant level, but H2 is
refused for not being significant.
TABLE II.
Figure IV. MODEL TESTING OF GROUP LOW BRAND IMAGE
RESULTS OF STRUCTURAL MODELS
TABLE III.
Paths
PSF--->PL
PL--->PSQ
PL--->SA
PL--->TR
PSQ--->SA
PSQ--->TR
SA--->TR
SA--->RI
TR--->RI
Hypothesis
Estimate
H1
H2
H3
H4
H5
H6
H7
H8
H9
0.549***
0.083
-0.155***
-0.179***
0.846***
0.340***
0.639***
0.335***
0.613***
COMPARISON OF PATH ANALYSIS RESULTS
Results
Support
Not Support
Support
Support
Support
Support
Support
Support
Support
High Brand Image
H1 PSF--->PL
H2 PL--->SA
H3 PL--->TR
H4 PSQ--->SA
H5 PSQ--->TR
H6 SA--->TR
H7 SA--->RI
H8 TR--->RI
V.
Figure II. MODEL TESTING RESULT
Since H2 is not significant, eliminate H2 to get the
modified model.
F. The Moderate Effect of Brand Image
As figure 2 shows, in group high brand image, among
8 hypotheses of the modified model, 7 of them are
supported for they are in significant level, but H3 is
refused for not being significant.
Figure III. MODEL TESTING OF GROUP HIGH BRAND IMAGE
As Figure 3 shows, in group of low brand image, all
of the 8 hypotheses of the modified model are supported
for they are in significant level.
Support
Not Support
Support
Support
Support
Support
Support
Support
Low Brand Image
Support
Support
Support
Support
Support
Support
Support
Support
CONCLUSION AND SUGGESTION
According to the testing models, the conclusions
have confirmed most of hypothesized. But H2 did not
reach significance level. The reason will possibly be that
customers’ evaluation of online retailers’ service quality
tend to be rational and objective and are not likely
affected by the negative emotions of perceived loss, this
can be also reflected from the higher mean that perceived
service quality presents. Most consumers believes that the
failure is occasional and infrequent and will not greatly
affect their evaluation of the quality of web services
H1 is high in significance and path coefficient. This
shows that consumers have perceptions about failure. And
each person's perceived failure is not on the same level.
H3 and H4 are high in significance and path
coefficient. It can be seen that even if perceived loss does
not affect the customers’ evaluation of the service quality
of online retailers, it will affect their emotional behaviors
and risk judgments to online retailers.
The significance of H5 is prominent. This result
corresponds with the view of Brady & Cronin （2001）
that service quality is a front variable of customer
satisfaction. The higher service quality customer perceives
the higher degree of satisfaction. The significance of H6 is
also outstanding. Thus, the improvement of service
quality will win the trust of its customers.
The significance of H7, H8 and H9 are also
outstanding and the path coefficient level also proves the
significance of these assumptions. Satisfaction has great
effect on trust and repurchase intention in e-commerce
environment. And trust also plays an important role in the
customer repurchase intention.
H10 is verified in the research. Comparing the results
of group high brand image and group low brand image,
group high brand image presents significantly higher
mean than low brand image in the following sectors:
perceived service quality, satisfaction, trust and
repurchase intention. It can be seen that good brand image
can ease the negative effect of service failure.
H3 is refused in group high brand image for it did not
reach significance level while all hypotheses are
supported in group low brand image. Therefore, in group
high brand image, customer satisfaction do not greatly
influence by perceived loss but by brand image. Brand
image is customer’s overall perception and subjective
view to a brand. For a good brand image, most customers
have established positive view to it and believe that
enterprise with good brand image will have satisfactory
service quality.
The results show that brand image can greatly ease
the negative effect of service failure. Brand image is not
only a symbol, but more a reflection of corporate culture
to customers. Good brand image represents enterprise’s
reputation and their commitment. With an increasing
number of online retailers spring up, enterprise should
strengthen brand building, implement extensive publicity
and promotion for a long-term development.
Firstly, online retailer should improve their service
quality. Take strict control and pay attention to details
from pre-sales to after-sales and from hardware facilities
to software system, provide excellent service to customers,
enhance customers’ identification to the brand.
Next, it is important for online retailers to build up
their own brand personality to distinguish themselves
from other competitors. Online retailers should analyze
target customers’ characteristic and demand to implement
brand positioning and establish value proposition.
Finally, online retailers can take full advantage of
advertisement, press, public relations, blog and virtual
community to integrate online and offline promotion, and
multi-channel disseminate enterprise’s brand personality
and philosophy to impress customers.
Research has shown that effective service recovery
can improve the customers’ loyalty after experience
service failure and create a good corporate image at the
same time. Therefore, it is significance for enterprise to
predict the service recovery and management. When the
inevitable emergence of web service failure, the website
should analyze the reasons for service failure and
initiative to seek customer feedback, focus on the
customer's mood and expectations of service recovery so
as to timely, rapid, targeted for service recovery. In
addition, website should learn the lessons from the error
again and again, establish and improve the service failure
and service recovery management system.
ACKNOWLEDGEMENT
This research was supported by Guangzhou Program
of Philosophy and Social Science under Grant of 10Y64
and the Fundamental Research Funds for the Central
Universities of China under Grant of 2011SM022.
REFERENCES
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
Xiucheng Fan, Jie Chen. Measurement of Brand Image: A
Brand Identity-Based Integrated Model and Empirical
Study. 2002
Park C W, Jaworski B J, MacInnis D J. Strategic brand
concept-image management. Journal of Marketing
Research, 1986, Vol.22(3): 621-635
Reynolds Thomas J, Gutman Jonathan. Advertising is
image management. Journal of Advertising Research, 1984,
Vol.24(February/March): 27-38
Forbes, L. P., Kelley, S. W., and Hoffman, K. D.
Typologies of e-commerce retail failures and recovery
strategies. Journal of Services Marketing, 19, 5, 2005, 280–
292.
Katherine E. Harris, Dhruv Grewal, Lois A. Mohr, Kenneth
L. Bernhardt. Consumer responses to service recovery
strategies: The moderating role of online versus offline
environment. Journal of Business Research. 2006
Ying-Feng Kuo, Shih-Ting Yen, Ling-Hsiu Chen. Online
auction service failures in Taiwan: Typologies and recovery
strategies. Electronic Commerce Research and Applications
10 (2011)
Derbaix, C. (1983), “Perceived risk and risk relievers：an
empirical investigation,” Journal of Economic Psychology,
Vol.3, pp.19-38.
Degeratu, A.A. Rangaswamy, J. Wu. Consumer Choice
Behavior in Online and Traditional Supermarkets: The
Effects of Brand Name, Price, and Other Search Attributes.
Working Paper, MIT Ecommerce Forum, 1999
Sheng-Ju Huang, Li-Ching Lin. The Study of Consumers’
Brand Awareness, Brand Image, Perceived Risk, and
Customer Loyalty Toward Organic Rice. June 11, 2009
Hsinchu, Taiwan
Xinhong Liang, The attribution of service failure and its
prevention. Enterprise Economy, 2006.
Gronroos, C, A., A, Service Quality Model and Its
Marketing Implication. European Journal of Marketing,
1984, 18(4): 36-44
Li Xin, Yu Bo. The Remedial Strategy For Service Based
On Customers' Second-Class Satisfaction. Management
World,2006.
Carol Xiaojuan Ou, Choon-Ling Sia: To trust or to distrust,
that is the question: investigating the trust-distrust paradox.
Commun. ACM 52(5): 135-139 (2009)
Hempel, Donald J.（1977）. Consumer Satisfaction with
the Home BuyingProcess ： Conceptualization and
Measurement, The Conceptualization of Consumer
Satisfaction and Dissatisfaction, H. K. Kieth(ed.),
Cambridge,Mass：Marketing Science Institute, 1977, PP.78.
Jones, Michael A. and Jaebeom Suh, 2000. Transactionspecific satisfaction and overall satisfaction: an empirical
analysis[J]. The Journal of Services Marketing. 14:147.