Two paths to customer loyalty: the moderating effect of the differentiation level strategy in the performance-satisfaction-value-intentions relationship

Purpose This paper aims to show how consumers process information differently under two dissimilar types of brand strategies. By analysing data from dishwashing detergent consumers who evaluated two different brands, one with a high differentiated/performance/price brand (HB) strategy and other with a low differentiated/cost/price brand (LB) strategy, it is shown how the structural relationship between some constructs differ under each price brand strategy. With a structural path analysis, the product performance, customer satisfaction, customer perceived value and behavioural intentions relationship are assessed. Additionally, the moderating effect of the brand strategy in this structural relationship is tested. Design/methodology/approach Data of a sample of n = 273 Mexican dishwashing detergent users were analysed. Respondents evaluated two brands of dishwashing detergent. One brand followed a high differentiated/performance/price strategy (Axion) and the other used a low differentiated/cost/price strategy (Roma). Participants had to have been consumers of both brands of detergents. A structural path analysis to show the moderating effect of the brand strategy was implemented. A nested comparison invariance test for structural weights to corroborate differences was used, as well. Findings Results confirm structural differences between both brand strategies in the constructs relationship. The HB strategy showed that both satisfaction and perceived value have a mediating effect between product performance and brand intentions; on the other hand, the LB strategy showed that only satisfaction has a mediating effect between these two constructs. The explanation amount for dependent latent variables was higher for the HB strategy than for the LB strategy. Originality/value This study offers a distinct view of the differentiated/quality brand strategy – low cost/price brand strategy duality. It provides a theoretical-empirical explanation of the cognitive processes that both strategies involve for a customer. As well, this study conceptually relates the generic strategies theory with the use of specific brand strategies.