Divided attitudinal loyalty and customer value: role of dealers in an indirect channel

Abstract

In many product categories, consumers show divided loyalty to more than one product. There are two key gaps in the extant literature regarding divided loyalty. First, previous studies have focused on the behavioral aspect while ignoring the attitudinal aspect of divided loyalty. Second, not much is known about how firms deal with consumers that show divided attitudinal loyalty. We conduct two studies to address these gaps. In Study 1, we (a) offer two explanations for divided attitudinal loyalty based on customer value and brand equity theories, (b) provide a boundary condition that attributes the explanations to the nature of competition faced by the firm, (c) evaluate firms’ reaction to customers that show divided loyalty and (d) examine dealers role in extraction of higher value from divided loyal customers. In Study 2, we examine the relative strength of alternative strategies—end customer value creation versus monetary incentives—that firms (suppliers) can use for encouraging dealers to intervene on their behalf with end customers. Both studies use multiple source data in a B2B setting. Results suggest that dealer recommendation can increase lifetime value of divided loyal customers and that a customer value creation strategy adopted by the supplier with the dealer will likely enhance the dealer’s willingness to intervene on behalf of the supplier.