The Effect of Customer Equity Drivers on Word-of-Mouth Behavior with Mediating Role of Customer Loyalty and Purchase Intention

Abstract

The uncertain stand in terms of product and service quality invites customers to get the advantage of other customers’ experiences in order to make a purchase decision. It has been discussed that word-of-mouth (WOM) influences consumer purchase behavior and it could create a robust tie like relatives and could also tie as close friends, acquaintances, and strangers. This paper intends to define the concepts of WOM and customer equity and study the terminology of current purchase intention, customer loyalty and correlates to consumer decision making. The data was collected utilizing self-administrated questionnaires. The results are obtained using Smart PLS 2.0, then using bootstrap algorithm the t-statistics are analyzed. The results indicate that customer equity drivers increase the customer loyalty and consequently ends in WOM by the customers. Despite the literature which has investigated the influence of customer equity drivers on the loyalty and purchase intention of the customers, this study contributes the analysis of drivers on WOM. Also, it reveals that if a firm invests on the customer equity drivers, the result will be loyalty and accordingly, the easiest way of advertisement that would be WOM. This study only focuses on a unique industry that can impact the generalizability of the contexts. Also, it relates only to the positive WOM effects. Future studies could strengthen the literature by taking in negative WOM with a broader population.DOI: http://dx.doi.org/10.5755/j01.ee.29.2.17718