Abstract

AbstractPurpose: This paper seeks to further the understanding of the domain of the customer equity construct, in developing country context. Building on their framework, a modified and extended construct (CUSTEQUITY), using systematic scale development procedure, is established with nomological evidence of its impact in Indian banking industry. Design/methodology/approach: The data are collected from 550 accountholders of five major national Indian banks–State Bank of India (SBI), Punjab National Bank (PNB), Housing Development Finance Corporation (HDFC), Industrial Credit and Industrial Corporation (ICICI), and Jammu and Kashmir Bank (JKB). The respondents are contacted using purposive sampling from Jammu city of North India. Exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation model (SEM) are used to analyze the data. Findings: The study findings validate the extended customer equity scale comprising two additional dimensions namely relational equity and social...

Highlights

  • In today’s highly competitive environment, maintaining a long-term relationship with customers is becoming more and more challenging

  • The positive regression weights (0.611) and the significant critical ratio (9.441) above 1.96 of all the relationship confirmed the nomological validity of CUSTEQUITY scale (Table 4)

  • Fifth Stage: Common method bias using Exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) Common method bias may be a potential problem when both dependent and independent variables are generated from the same respondents at the same time

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Summary

Introduction

In today’s highly competitive environment, maintaining a long-term relationship with customers is becoming more and more challenging. Rust et al (2004) and Lemon et al (2001) are the major proponents of customer equity concept, who have established value equity (VE), brand equity (BE), and retention equity as the three main dimensions of customer equity Both the studies are predominantly more explored by marketing researchers in different settings such as banking and supermarket (Zhang et al, 2014), retail (Ramaseshan, Rabbanee, & Tan Hsin Hui, 2013), airline (Rust et al, 2004) online companies (Lemon et al, 2001), and telecommunication (Kumar, Scheer, & Steenkamp, 1995). Unlike these studies, Marzouk (2014) study has used modified customer equity framework by including relationship equity dimension (trust, satisfaction, and commitment) in place of retention equity along with the other two dimensions (namely value equity and brand equity), to examine its impact on financial performance in the banking sector

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