Customer-based brand equity, equity drivers, and customer loyalty in the supermarket industry

Arthur W Allaway .
The University of Alabama, Tuscaloosa, Alabama, USA

Patricia Huddleston and Judith Whipple

Michigan State University, East Lansing, Michigan, USA, and

Alexander E. Ellinger
The University of Alabama, Tuscaloosa, Alabama, USA
Abstract Purpose The purpose of this paper is to measure consumer-based brand equity in the supermarket industry and to identify the strategy drivers associated with levels of brand equity for consumers typically patronized supermarkets. Design/methodology/approach A nine state survey of consumers was conducted to provide brand equity ratings of 22 national, regional, and specialty supermarket brands. Findings Factor analysis yields two brand equity outcome dimensions and eight brand equity drivers. A large proportion of consumers clearly have strong feelings about the supermarkets they patronize, and that effort expended in keeping customers, service level, and product quality and assortment appear to be basic requirements for achieving high levels of consumer-based brand equity. The top supermarket brands typically score highly on at least one other key driver of equity. Supermarket brands that use formal loyalty programs to drive patronage in general have lower levels of customer-based brand equity. Research limitations/implications Selection of designated supermarkets was limited by spatial distribution in the geographic area. The sample is more afuent and educated than the general US population. Practical implications As retailers search for ways to compete more effectively for consumer dollars and loyalty, they need to explore in more detail the customer-based brand equity and the drivers of customer equity associated with their retail brands. Originality/value This paper is the rst to link consumer-based brand equity and the supermarket branding efforts that drive it for specic retail brands. In an industry with numerous choices in nearly all market areas and low switching costs, successful branding can translate into emotional commitment, shopping loyalty, and even person-to-person promotion of the brand to others. Keywords Brand equity, Supermarkets, Surveys, Factor analysis, Brand management, United States of America Paper type Research paper

An executive summary for managers and executive readers can be found at the end of this article.

Introduction
One of the most visible themes in the marketing literature in recent years has been a merging of the research streams linking consumer-based brand equity, customer equity, and loyalty. Customer-based brand equity involves the set of memory-based associations to a particular brand that exist in the minds of consumers (Keller, 2003). Customer equity is dened as the value of the customer to the brand (Rust et al., 2004; Blattberg and Deighton, 1996). Both brand equity and customer equity emphasize the importance of customer
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loyalty (Leone et al., 2006). Customer loyalty generates numerous benets for a brand and is a focus of increasing numbers of marketing strategies (Jacoby and Chestnut, 1978). Customers who are loyal to a particular brand buy more, are willing to pay higher prices and generate positive word of mouth (Reichheld, 1993; Wright and Sparks, 1999; Zeithaml et al., 1996). Nowhere is the merging of these research streams more evident than in retailing. Customer loyalty is a critical goal for retailers because of an increasingly competitive retail environment and low customer switching costs (Wallace et al., 2004). The rise of the retailer as a brand is one of the most important trends in retailing (Grewal et al., 2004). Successful retail branding can be extremely important in helping inuence consumer perceptions and drive store choice and loyalty (Ailawadi and Keller, 2004).

Customer relationships and the supermarket industry

The retail grocery industry in the US is a $500 billion dollar industry, and has been the subject of extensive research over the history of the marketing literature. Indeed, much of the 190

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Customer-based brand equity, equity drivers, and customer loyalty Arthur W Allaway et al. .

Journal of Product & Brand Management Volume 20 Number 3 2011 190 204

literature that forms the theory base of marketing was generated by research done in the grocery industry. With the average consumer visiting a grocery store more than once every week, the relationships among consumers and their grocery stores are among the most ubiquitous and visible in society. In addition, the supermarket industry is experiencing a period of signicant change. There has been a high level of consolidation of brands in the industry as well as a dramatic rise in competition for traditional supermarkets from supercenters such as Wal-Mart and Target and specialty stores such as Whole Foods Market (Kleinberger and Badgett, 2007). In fact, one of the strongest brand images in the grocery industry currently belongs to Whole Foods Market, which has reshaped the supermarket experience (Reyes, 2005). One response among traditional supermarket chains to the increased competition from supercenters and specialty supermarkets has been the creation of customer-centered marketing efforts such as loyalty card programs. However, although loyalty programs are spreading across the grocery landscape loyalty card programs do not seem to yield results in terms of increased loyalty (Bellizzi and Bristol, 2004). A 2007 IBM survey found that nearly half of grocery customers carry a negative attitude toward their grocer (Kleinberger and Badgett, 2007).

consumer-based retail brand equity. Gomez et al. (2004) identify a range of items associated with customer service, quality, and value that drive customer satisfaction in the supermarket sector. Keller and Lehmann (2006) call for further research in branding which ties what companies do to what customers think and feel about the brand and what customers do with respect to the brand. Actions that retail rms take to improve their brand equity for consumers include customer service training of personnel, store layout, promotion, location, pricing, product quality, product assortment, loyalty programs, and community involvement. Consumers then react to these store branding efforts over time by building up sets of shortcut feelings about the store that inuence their behaviors toward the brand and its competitors in a market. While there may be universal drivers of equity, the entire eld of market segmentation is based on the fact that there will be different groups of consumers who are driven by different combinations of brand factors, and that there can be similar total levels of customer-based brand equity across retail brands in a category for very different reasons. Different combinations of equity drivers may be the key that can allow specic supermarkets to identify their own unique sources of distinct competency to mitigate the effects of competition and survive.

Customer-based brand equity for supermarkets

As grocers search for ways to compete more effectively for consumer dollars and loyalty, they need to explore in much more detail the customer-based brand equity and the drivers of customer equity associated with their retail brands. Customer-based retail brand equity involves a shortcut in the minds of consumers that recalls from memory the most salient positive elements of satisfaction with past shopping experiences and goods purchased, which in turn inuences future patronage and minimizes the potential inuence of competitor efforts (Ailawadi and Keller, 2004). In the grocery industry, customer-based brand equity is the result of a supermarket chains total brand-building efforts over time, which involves the daily implementation of the marketing message through numerous service, product, price, and promotion decisions which are experienced in the stores by consumers. Supermarkets offer a variety of goods and services simultaneously so that the shopping experience can be as important to the customer as differences in the physical characteristics of the goods (Gomez et al., 2004).

Research questions
This research is an effort to measure consumer-based brand equity in the supermarket industry and to identify the strategy drivers associated with various levels of brand equity for consumers typically patronized supermarkets. In addition, we search for levels of customer-based brand equity and the particular drivers of brand equity associated with specic national, regional, and specialty supermarket chains. Specically, we pose the following research questions: . Are there identiable dimensions of customer-based brand equity in the supermarket industry? . If so, are there also identiable drivers of customer-based brand equity in the supermarket industry? . Do national supermarket chains have high, low, or similar levels of customer-based brand equity compared to regional chains and specialty grocery chains? . At a ner degree of detail, which supermarket brands have earned the highest levels of customer-based brand equity? . Among national regional, and specialty supermarket chains, are there differences in the drivers of customerbased brand equity which provide a source of specic competitive advantage for certain brands? . What is the relationship between customer-based brand equity and patronage?

Drivers of supermarket brand equity

Researchers are relatively consistent about the basic dimensions of retail strategy that underlie the building of successful relationships between customers and their retail brands. The store patronage, loyalty, literature, brand and customer equity, and strategy literatures all yield potential drivers of supermarket brand equity. Pan and Zinkhan (2006) categorize patronage-driving characteristics into productrelevant factors such as product quality and price, marketrelevant factors such as the service provided by the store, and personal factors. Ailawadi and Keller (2004) identify ve main dimensions of store image (access, in-store atmosphere, price and promotion, cross-category assortment, and withincategory assortment) that form the basis for their measures of 191

Research methodology
Targeting the dimensions of retail strategy discussed above, a Likert scale-based questionnaire based on standard research procedures (Churchill, 1979) was developed from previously validated scales, and adapted to a grocery setting. The survey was pretested among graduate students and academicians familiar with food store retailing and items that were confusing or unnecessary were eliminated. Respondents were given the opportunity to rate a conventional

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supermarket patronized most often, a specialty supermarket patronized most often (among specialty grocery stores), or one of each. To provide an anchor point for assessing the consumerbased brand equity of national, regional, and specialty supermarkets, we chose to sample consumers where we know that one consistent brand was present in each of their market areas. A mailing list of US households in ten states was purchased specically in zip codes where a Whole Foods Market was located. Questionnaires were sent to 4,500 households. A total of 105 surveys were non-deliverable and ten were deemed unusable. A total of 659 usable questionnaires were returned providing a response rate of 15 percent. Of that total sample, 630 respondents completed the survey with respect to conventional stores, and 494 respondents completed the survey with respect to specialty stores roughly 70 percent of respondents completed the survey with respect to shopping experiences at both types of stores. Non-response bias was evaluated using comparisons of early and late responders as recommended by Armstrong and Overton (1977). No signicant differences between the respondent groups were found with respect to shopping behaviors (e.g. shopping frequency), demographics, or across the items included in this paper. The sample was 39.3 percent male and 60.7 percent female. Nearly 34 percent of the sample was between the ages of 35 and 54. Roughly 43 percent were between the ages of 55-74, about 8 percent were between the ages of 18 and 34, and 15 percent were over the age of 75. The majority of the sample was highly educated: 28.9 percent had a bachelors degree and 41.6 percent had a graduate or professional degree. Our sample was also afuent, with an average household income of more than $80,000 per year (39.2 percent). These characteristics are consistent with the geographic areas from which the sample was drawn. Among the 22 chains rated by a sufcient number of respondents for the analysis were three nationally recognized supermarket brands and one supercenter (Wal-Mart), 16 regional brands, and three specialty foods brands. The analysis focuses on the brands rather than their ownership, as several of the regional brands are owned by one of the national brands. For the purposes of this research we assume that regional brands owned by national brands such as Tom Thumb, Vonss, and Randalls (owned by Safeway) and Ralphs (owned by Kroger) are thought of as regional brands by their customers. Although the Safeway and Albertsons names brands are now only used in the western region of the US, we treat them as national brands because of their past presence in large areas of the nation and the familiarity people have with the names. As Wal-Marts customer shopping characteristics matched those of the national chains, it was included in that group for the analysis.

ten signicant factors, two brand equity outcome factors and eight brand equity drivers. Two factors were clearly associated with brand equity and loyalty outcomes. Based on its loadings, the rst was titled emotional loyalty. As shown in Table I, it accounts for 12.2 percent of the variance in the data and loads highly on a set of variables which include I care about the long term success of this store, I have faith in this store, I feel loyal to this store, and I am very committed to this store. This factor includes most of the typically used descriptors of desired brand equity outcomes. One of the strongest possible customer relationship variables in use today loads on this factor, which is I encourage friends to go to this store. Based on these ndings, it appears that the sampled population denitely has strong feelings about loyalty and commitment relative to their supermarkets. Interestingly, a second distinct outcome factor emerged from the data. Based on its loadings, this factor was titled fanaticism. As shown in Table II, it accounts for 7.9 percent of the variance in the data and loads highly on such variables as I would not switch from this store under any circumstances, if competitors stores are more conveniently located I still shop at my selected store, I am willing to pay a higher price for the products/services I currently receive from this store, and I am willing to go the extra mile to remain a customer of this store. These variables indicate a level of brand equity such that consumers choose not to even consider shopping at other stores besides their favorite store. These two outcome factors indicate that customer-based brand equity clearly does exist in the supermarket industry, and that the choice to continue shopping at a particular supermarket involves much more than just location and prices. It is evident from the ndings above that emotion and involvement are important to consumers, and that grocery retailers that tap into those emotions have the opportunity to build much stronger brands than those who simply focus on providing groceries. Table I Outcome factor 1
Emotional loyalty I care about the long-term success of this store I have faith in this store This store gives me a feeling of condence I trust this store I would expend effort on behalf of this store to help it succeed I say positive things about this store to others I am emotionally attached to the store I feel loyal to this store I have a sense of belonging to this store I will recommend this store to someone who seeks advice I am very committed to this store I encourage friends to go to this store Factor loadings on original variables 0.763 0.757 0.744 0.699 0.648 0.632 0.627 0.624 0.605 0.595 0.571 0.514

Dimensions of customer-based brand equity

The conventional supermarket data and the specialty supermarket data were initially subjected to factor analysis separately to explore the structure of the data. The results showed that the same factors were associated with consumer equity across store types, thus, factor analysis was rerun on the entire set of perceptions of the national, regional, and specialty supermarket brands. A total of 67 scale items yielded 192

Notes: Eigenvalue: 8.64; percent of variance explained: 12.17

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Table II Outcome factor 2

Fanaticism I would not switch from this store under any circumstances There are certain products I exclusively purchase at this store no matter what the price is If competitors stores are more conveniently located I still shop at my selected store Even if this store were more difcult to reach, I would keep buying there I only buy from my selected store I am willing to pay a higher price for the products/services I currently receive from this store I am willing to go the extra mile to remain a customer of this store Factor loadings on original variables 0.666

0.664 0.644 0.639 0.600

0.590 0.584

Notes: Eigenvalue: 5.60; percent of variance explained: 7.89

Drivers of brand equity for supermarkets

After identifying the two dimensions of customer-based brand equity outcomes, the next stage of the analysis is to attempt to identify drivers associated with these outcome dimensions. Drivers of customer-based brand equity involve supermarket strategies aimed at enhancing the shopping experience of their customers in pursuit of consumer loyalty and increased revenue. The following drivers were identied in the factor analysis, and are ranked by percent of variance explained in the data. Based on their factor loadings, these drivers are named service level, product quality and assortment, programs for rewarding patronage, effort expended in keeping customers, prices, layout, location, and community involvement. The rst such driver, service level, explains 8.9 percent of the variance in the data and is characterized by high loadings on two related sets of very specic service-centered variables. The rst set includes variables related to the employees of the retailer (Table III). These include this store has helpful employees, this store has friendly employees, the Table III Equity driver 1
Service level This store has helpful employees This store has friendly employees The employees at this store(s) are polite to me This store has an adequate number of employees available to assist me This store is service oriented In general, I am satised with the service offered at this store My shopping experiences at this store have always been pleasant Factor loadings on original variables 0.813 0.810 0.761 0.710 0.698 0.681 0.578

employees at this store are polite to me, and this store has an adequate number of employees available to help me. This factor has very important implications for retail branding efforts, since it impacts hiring and training programs as well as store management decisions and day-to-day employee motivation. The second set of closely related variables involves the levels of service offered by the supermarket, specically the store is service oriented, and in general, I am satised with the service offered at this store. Another variable which loads on this service level factor is my shopping experiences at this store have always been pleasant, which appears based on the loadings to be based largely on high levels of customer service. The second driver (Table IV), product quality and assortment, explains 8.5 percent of the variance in the data and is characterized by high loadings on product quality variables such as the products at this store are of high quality, this store has good quality merchandise, and I shop this store because its products are superior to its competitors, and on assortment-centered variables such as this store has the right merchandise selection, this store has an extensive assortment of products, and this store is well stocked across its different departments. Although there are no surprises, the fact that both of these rst factors appear much more important than price is relevant to retailers interested in building brand equity in their customer bases. The next two drivers of customer-based brand equity for supermarkets deal with the formal and informal programs the retailer has put in place to reward customers for choosing to shop there. The rst, titled Programs for rewarding patronage, explains 5.6 percent of the variance in the data and loads highly on such variables as this store offers rewards (such as future use coupons) to customers for their patronage, this store offers customers something extra if they keep buying there, this store offers discounts to customers for their patronage, and this store offers an attractive loyalty program (Table V). Interestingly, these promotion-centered activities load on a different factor than general price levels. Table IV Equity driver 2
Product quality and assortment The products at this store are of high quality The products at this store are very satisfactory compared to other stores This store has good quality merchandise I shop this store because its products are superior to its competitors The store has products that are not available at other stores This store has the right merchandise selection This store is well stocked across its different departments The store offers the assortment of products I am looking for This store has an extensive assortment of products Factor loadings on original variables 0.709 0.680 0.667 0.617 0.593 0.589 0.558 0.529 0.522

Notes: Eigenvalue: 6.28; percent of variance explained: 8.85

Notes: Eigenvalue: 6.05; percent of variance explained: 8.53

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Table V Equity driver 3

Programs for rewarding patronage This store offers rewards (such as future use coupons) to customers for their patronage This store offers customers something extra if they keep buying there This store offers discounts to customers for their patronage This store offers an attractive loyalty program This store often offers sale items Factor loadings on original variables 0.866 0.851 0.840 0.795 0.536

Table VII Equity driver 5

Prices I am satised with the general price level of merchandise at this store This store provides a good value for the money I am satised with the price/quality ratio offered at this store Factor loadings on original variables 0.831 0.819 0.795

Notes: Eigenvalue: 2.89; percent of variance explained: 4.07

Notes: Eigenvalue: 3.997; percent of variance explained: 5.63

The next factor, titled Effort expended in keeping customers, explains 5.0 percent of the variance in the data and loads on more informal and intangible variables related to how hard the store tries to build regular ties with its customer base and how satised the respondent is with those efforts (Table VI). These variables include this store makes an effort to increase customer loyalty, this store makes various efforts to improve its tie to regular customers, I am happy with the efforts that this store is making toward keeping me as a customer, and I am satised with the relationship I have with this store. The next factor, which explains 4.1 percent of the variance in the data, is the prices driver of customer-based brand equity of supermarket brands (Table VII). Its relative low ranking as a driver relative to the service and product drivers discussed above is interesting. The variables loading on this factor include I am satised with the general price level of merchandise at this store, this store provides a good value for the money, and I am satised with the price/quality ratio offered at this store. This relatively low ranking may be related to the generally more afuent demographic areas from which the sample was drawn, or it may be that customerbased brand equity is more strongly tied to non-price variables more than to price variables. The layout factor, explaining 3.3 percent of the variance in the data, loads highly on four variables typically associated Table VI Equity driver 4
Effort expended in keeping customers This store makes various efforts to improve its tie to regular customers This store really cares about keeping their customers This store makes an effort to increase customer loyalty I am happy with the efforts that this store is making toward keeping me as a customer I am satised with the relationship I have with this store As a regular customer, I have a high-quality relationship with this store Factor loadings on original variables 0.758 0.693 0.691 0.672 0.540 0.502

with supermarket evaluation, including nding the products I need is easy, the width of the aisles at this store allows for easy cart navigation, it is easy to locate the different departments within this store, and this store has a pleasing layout. While these do not appear to be the most important drivers of customer-based brand equity, it is still important for retail brand management efforts to keep them in consideration (Table VIII). It is understandable that the location factor, as a separate element of the strategy mix from such in-store characteristics as service, quality, and loyalty-enhancing programs and efforts, would be less tied to consumer-based brand equity than those factors. However, location decisions that match market segments of interest with access to the in-store characteristics that build brand equity for those segments are critical to supermarket chain success. Explaining 3.1 percent of the variance in the data, the variables which load highly on the location factor include this store is located where it can be easily reached, and I am satised with the location of this store (Table IX). Since consumers typically have driving access to more than one supermarket brand in their area, the building of brand equity is the key to making distance less important. If different supermarket options in an area have Table VIII Equity driver 6
Layout Finding the products I need is easy The width of the aisles at this store allows for easy cart navigation It is easy to locate the different departments within this store This store has a pleasing layout Factor loadings on original variables 0.685 0.650 0.599 0.568

Notes: Eigenvalue: 2.32; percent of variance explained: 3.26

Table IX Equity driver 7

Location This store is located where it can be easily reached I am satised with the location of this store Factor loadings on original variables 0.759 0.738

Notes: Eigenvalue: 3.57; percent of variance explained: 5.03

Notes: Eigenvalue: 2.175; percent of variance explained: 3.06

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indistinguishable levels of equity-building characteristics, distance becomes the only differentiating characteristic. The last signicant factor derived from the factor analysis, explaining 2.1 percent of the variance in the data, is community involvement (Table X). While not a critical driver of brand equity for supermarkets, it could provide a source of competitive advantage in cases where a supermarket brand has no other truly distinguishing advantages over competition. There are enough respondents who feel that it is important to make it statistically signicant. The variables which load highly on this factor include this store provides benets to my local community, and this store offers educational services (i.e. cooking classes or other social activities) that I can participate in.

satised the respondent is with those efforts. Product quality and assortment and service level and community efforts and prices are all positive predictors of emotional loyalty. However, the programs for rewarding patronage driver is negatively related to emotional loyalty and to fanaticism. This appears to lend support to the Bellizzi and Bristol (2004) ndings that loyalty card programs do not seem to yield results in terms of increased loyalty. The fanaticism model, in addition to the efforts driver, shows a positive relationship between product quality and assortment and community efforts, but not, interestingly enough, service level.

Customer-based brand equity of supermarket types

Our next set of analyses examines how the levels of customerbased brand equity vary across supermarket types and brands. We rst examine average customer-based brand equity levels of national chain brands versus regional chain brands and specialty chain brands (Table XII). The national brands, based on their name recognition, their ability to grow to and keep national stature, and their size and marketing power, should be expected to have strong scores on consumer-based brand equity. On the emotional loyalty dimension, however, an ANOVA test shows that the national brand group has far lower scores (p 0:00) on consumer-based brand equity (3.07 out of a possible 5) than either the regional brand chain group (3.34) or the specialty chain group (3.83). These scale items tap into consumer feelings of trust, loyalty, commitment, and willingness to recommend the brand to a friend. On the fanaticism dimension, although the scores are lower across the board than the emotional loyalty scores, the specialty supermarket chains garnered much higher fanaticism ratings (3.03) than the national (2.31) and regional (2.40) brands on such consumer feelings as willingness to pay more, willingness to travel further, and unwillingness to switch.

Summated scales brand equity measures and drivers

Based on the factor analysis above, the scale items loading on both the consumer-based brand equity outcome factors and the drivers of equity were summated into new variables by averaging the rating scores for each person on each factor (Hair et al., 2010, p. 124). These were named with the same titles as the factors they represent. Then, since the supermarket brands in each state varied widely, a check on consistency in ratings was performed by testing the mean summated scale scores of Whole Foods Market by state. If ratings of Whole Foods differ signicantly by state, there could be a state bias which might affect our ability to compare different supermarket brands. However, there was only one signicant difference (0.05) across the states, the location dimension, which is apparently an indicator of different sized zip codes and travel difculties in different areas.

Predictive modeling of customer-based brand equity outcomes

We employ a stepwise regression model to investigate the relationship between customer-based brand equity outcomes and the strategy-based equity drivers, which allows us to estimate predictive ability and also assess the order of entry of the drivers as a surrogate for their relative importance in driving the emotional loyalty and fanaticism. As shown in Table XI, the brand equity driver with the highest differentiating power among supermarket brands for both the emotional loyalty and fanaticism dimensions is effort expended in keeping customers. This driver is comprised of the informal and intangible variables related to how hard the store tries to build regular ties with its customer base and how Table X Equity driver 8
Community involvement This store provides benets to my local community This store offers educational services (i.e. cooking classes or other social activities) that I can participate in Factor loadings on original variables 0.600

Customer-based brand equity of supermarket brands

Table XIII shows the rankings of the supermarket brands rated by the sampled population. For emotional loyalty, two specialty supermarkets rank rst and second. Trader Joes is a privately held chain of specialty grocery stores mainly in California but with locations in 24 other states. Trader Joes offers a wide range of bulk products, store brands, and unique shopping experiences. Central market is a division of HEB in Texas that offers a similar natural foods-centered concept to Whole Foods Market. Both Central Market and Whole Foods Market offer product assortments very similar to those of traditional supermarkets rather than a reduced specialty selection, and as such, have the potential to serve as the sole supplier of supermarket items for households in their trade areas. Following those two are three dominant regional supermarket brands, Meijer in the Midwest, Publix in the Southeast, and Harris Teeter in the Mid-Atlantic States. Following Whole Foods Market in the number six spot are two more regional chains. HEB is a dominant privately owned supermarket brand in Texas. Tom Thumb is the rst brand on the list that is owned by a national chain, which since 1999 has been owned by Safeway. Wal-Mart follows as the rst of the national brands on the emotional loyalty dimension of 195

0.606

Notes: Eigenvalue: 1.51; percent of variance explained: 2.13

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Table XI Predictive modeling of customer-based brand equity outcomes

Order entered Unstandardized coefcients B Std error 2 0.688 0.505 0.336 0.213 2 0.075 0.071 0.064 0.136 0.028 0.041 0.037 0.018 0.018 0.025

t
25.049 17.868 8.244 5.802 24.227 3.991 2.585

Sig. 0.000 0.000 0.000 0.000 0.000 0.000 0.010

Emotional loyalty (Constant) Efforts Product Service level Programs Community Prices Model R square Adjusted R square Std error of the estimate F Sig. Fanaticism (Constant) Efforts Product Programs Community Model R square Adjusted R square Std error of the estimate F Sig.

1 2 3 4 5 6

0.64 0.64 0.56 270.13 0.00

1 2 3 4

2 0.480 0.441 0.437 2 0.103 0.066

0.171 0.034 0.046 0.024 0.024

22.811 12.793 9.600 24.333 2.789

0.005 0.000 0.000 0.000 0.005

0.40 0.40 0.75 149.18 0.00

Table XII Brand equity outcomes by supermarket type

Supermarket type National brands Regional brands Specialty brands Emotional loyalty 3.073 3.340 3.826 Fanaticism 2.311 2.397 3.026

Table XIII Emotional loyalty scores by supermarket brand

Supermarket brand Trader Joes (specialty) Central Market (specialty) Meijer (regional) Publix (regional) Harris Teeter (regional) Whole Foods (specialty) HEB (regional) Tom Thumb (regional) Wal-Mart (national) Dominicks (regional) Vons (regional) Kroger (national) ShopRite (regional) Jewel-Osco (regional) Safeway (national) Ralphs (regional) Albertsons (national) Geography Multistate Texas Midwest Southeast East Central Multistate Texas Texas Multistate Midwest California Multistate Northeast Midwest Multistate California Multistate Emotional loyalty score 3.991 3.922 3.875 3.798 3.607 3.564 3.366 3.283 3.269 3.217 3.170 3.100 3.073 3.049 3.042 2.959 2.882

consumer-based brand equity. Two regional divisions of Safeway, Dominicks and Vons, are next before the rst traditional national supermarket brand, Kroger. Near the bottom of the list are three more regional chains as well as Safeway and Albertsons, which are both traditional supermarket national brands. The fanaticism dimension shows a similar pattern of brand rankings but with interesting differences from the emotional loyalty dimension (Table XIV). Although fanaticism scores in general are signicantly lower than emotional loyalty scores, most of the same brands stand out. Central Market has the highest score on the fanaticism dimension, but is followed by Publix. Publix is the largest employee-owned supermarket chain in the USA, and, according to a 2007 IBM study, was rated best in class and had a customer advocacy rating (the percent of customers who serve as advocates of the store) just below the leader Wegmans and just above Whole Foods Market (Kleinberger and Badgett, 2007). Whole Foods is fth on our fanaticism dimension, but is followed by Wal-Mart. 196

This fanaticism ranking is much higher than Wal-Marts ranking on the emotional loyalty dimension. As above, the national brand supermarket chains are near the bottom of the fanaticism list, with little difference between the 2.27

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Table XIV Fanaticism scores by supermarket brand

Supermarket brand Central Market (specialty) Publix (regional) Trader Joes (specialty) Harris Teeter (regional) Whole Foods (specialty) Wal-Mart (national) Meijer (regional) Tom Thumb (regional) Jewel-Osco (regional) HEB (regional) Safeway (national) Kroger (national) ShopRite (regional) Vons (regional) Albertsons (national) Dominicks (regional) Ralphs (regional) Geography Texas Southeast Multistate East Central Multistate Multistate Midwest Texas Midwest Texas Western Multistate Northeast California Multistate Midwest California Fanaticism score 3.250 3.016 2.970 2.874 2.858 2.651 2.590 2.348 2.320 2.311 2.267 2.199 2.170 2.161 2.126 2.105 2.076

fanaticism score of Safeway, the 2.20 score of Kroger, and the 2.13 score of Albertsons.

Drivers of customer-based brand equity in the supermarket industry

As brands in a crowded marketplace evolve, they typically seek to differentiate themselves from competitors by investing in one or more equity drivers that they feel can provide them with a competitive advantage in serving specic customer segments. In the supermarket industry, the brands that rank highest on the most important drivers of customer-based brand equity would seem to be those that have been most successful at brand-building. Table XV summarizes these comparisons. From the modeling results, it appears that the most important driver of differences among the supermarket chains on customer-based brand equity is effort expended in keeping customers. This driver taps into the informal efforts made by the different supermarket chains to create relationships with their customers. On the efforts driver of equity, Harris Teeter leads the list of supermarket brands, followed by Trader Joes and Publix, with Meijer again in the top group. Interestingly, both Safeway and Albertsons are in the top half of the list ahead of Whole Foods Market. Kroger and Wal-Mart take up two of the lowest three spots on the efforts driver. On the product driver, the three specialty brands lead the list, with Whole Foods second behind Central Market and ahead of Trader Joes. Following are several strong regional chains including Meijer, Harris Teeter, Publix, and HEB, with Wal-Mart in the middle of the list. The three national brands (Safeway, Kroger, and Albertsons) are near the bottom of the list on product quality and assortment ratings. The supermarket chains ranked most highly on service level appear to have been successful at both training their employees to value customer service and creating a brand image associated with high service. The top six supermarket chains on service level include the three specialty brands (Trader Joes, Central Market, and Whole Foods) and three strong regional supermarket brands (Harris Teeter, Publix, 197

and Meijer). Interestingly, three national chains (Kroger, WalMart, and Albertsons) are rated as the bottom three on the service level driver. The programs for rewarding patronage driver refers to formal programs for rewarding patronage. On the programs driver, the rankings change radically from those above. Each of the highest ranking supermarket brands on programs is known for its loyalty programs for its customers. Several of the highest ranking brands on programs are divisions of Safeway. Most of the high ranking chains on previous drivers are at the bottom of the list in terms of their customer loyaltyenhancing programs, and Wal-Mart is last, just below Whole Foods Market. Based on the results of the regression model, chains ranking high on this driver in general have lower levels of customer-based brand equity. Only Harris Teeter of the three highly ranked regional chains above remains high on the programs driver. Harris Teeter offered one of the rst formal loyalty card programs in the nation, The very important customer program. On the prices driver, Wal-Mart leads the rankings, which is logical given its reputation for low prices. Lowest prices have been the basis for Wal-Marts success and are responsible for its current spot as the largest seller of groceries in the nation. Interestingly, many of the independently owned regional chains appear in the top half of the list, including Meijer, HEB, and Publix. Noteworthy as well, Safeway and Albertsons are rated as near the bottom in terms of the price driver. At the very bottom of the list, however, is Whole Foods Market, apparently perceived by the sampled population as the highest priced brand in their shopping area. For the layout driver, the familiar three independent regional chains, Meijer, Publix, and Harris Teeter lead the list of supermarket brands, followed by three regional divisions of national chains. The three specialty chains were rated near the bottom of the rankings, as were the Safeway and Albertsons brands. Interestingly, HEB was rated nearly last on the store layout driver. On the location driver, Safeway has the number one position in the rankings, followed by seven regional brand supermarkets. Not surprisingly with their smaller numbers of stores, Wal-Mart and the specialty supermarkets rank in the second half of the list. However, it is hard to make too many judgments about the location driver because of the nature of the sampling plan for this study. Finally, on the community driver, Central Market, the HEB specialty supermarket brand, is signicantly higher than the number two brand Whole Foods. As with many of the drivers of equity, the rest of the top half of the list is dominated by strong regional brands. Wal-Mart and, interestingly enough, Trader Joes, take up two of the lowest three spots on the community list.

Discussion
Based on the results of this study, it is evident that there are large differences in the levels of consumer-based brand equity earned by supermarket chains. However, several supermarket brands who have earned similarly high total scores on consumer-based brand equity have created those levels with their own unique combinations of equity drivers. First, for the specialty chains (Whole Foods, Central Market, and Trader Joes), each of the three is ranked in the top six chains on both the emotional loyalty dimension and

Arthur W Allaway et al. .

Table XV Equity drivers by supermarket brand

Product Programs Prices Layout Location Community

Customer-based brand equity, equity drivers, and customer loyalty

Efforts

Service level

198

Harris Teeter (3.795) Trader Joes (3.744) Publix (3.583) Safeway (3.575) Meijer (3.542) Central Market (3.451) Vons (3.433) Tom Thumb (3.396) Albertsons (3.297) HEB (3.247) Jewel-Osco (3.233) Whole Foods (3.227) ShopRite (3.219) Dominicks (3.208) Kroger (3.181) Ralphs (3.169) Wal-Mart (2.870)

Trader Joes (4.490) Central Market (4.454) Harris Teeter (4.345) Whole Foods (4.269) Publix (4.265) Meijer (4.241) Vons (4.132) Safeway (4.067) HEB (4.062) ShopRite (3.908) Dominicks (3.902) Ralphs (3.886) Jewel-Osco (3.880) Tom Thumb (3.875) Kroger (3.875) Wal-Mart (3.825) Albertsons (3.797)

Central Market (4.425) Whole Foods (4.337) Trader Joes (4.321) Meijer (4.178) Harris Teeter (4.160) Publix (4.022) HEB (3.869) Vons (3.751) Wal-Mart (3.741) ShopRite (3.722) Jewel-Osco (3.709) Kroger (3.671) Ralphs (3.650) Safeway (3.583) Dominicks (3.521) Tom Thumb (3.507) Albertsons (3.451)

Harris Teeter (3.744) Dominicks (3.725) Vons (3.722) ShopRite (3.688) Safeway (3.655) Ralphs (3.551) Kroger (3.523) Albertsons (3.497) Jewel-Osco (3.455) Tom Thumb (3.353) Meijer (2.900) Central Market (2.565) HEB (2.421) Publix (2.376) Trader Joes (1.888) Whole Foods (1.797) Wal-Mart (1.667)

Wal-Mart (4.556) Meijer (4.489) Trader Joes (4.417) HEB (4.376) ShopRite (4.157) Publix (4.128) Jewel-Osco (3.886) Harris Teeter (3.846) Kroger (3.759) Central Market (3.745) Vons (3.741) Dominicks (3.711) Albertsons (3.657) Safeway (3.644) Tom Thumb (3.569) Ralphs (3.490) Whole Foods (3.332)

Meijer (4.203) Publix (4.191) Harris Teeter (4.173) Dominicks (4.094) Ralphs (4.087) Vons (4.037) ShopRite (4.016) Kroger (3.973) Wal-Mart (3.972) Jewel-Osco (3.926) Albertsons (3.924) Central Market (3.897) Trader Joes (3.862) Whole Foods (3.862) Safeway (3.817) HEB (3.815) Tom Thumb (3.688)

Safeway (4.759) Meijer (4.750) Dominicks (4.656) HEB (4.581) Publix (4.577) Harris Teeter (4.558) Ralphs (4.545) Vons (4.463) Jewel-Osco (4.455) Wal-Mart (4.444) Albertsons (4.426) Whole Foods (4.379) ShopRite (4.353) Kroger (4.309) Trader Joes (4.265) Tom Thumb (4.176) Central Market (4.118)

Central Market (3.794) Whole Foods (2.741) HEB (2.679) ShopRite (2.633) Meijer (2.594) Tom Thumb (2.412) Publix (2.385) Harris Teeter (2.340) Kroger (2.149) Vons (2.019) Jewel-Osco (1.977) Safeway (1.897) Albertsons (1.867) Ralphs (1.854) Wal-Mart (1.833) Trader Joes (1.800) Dominicks (1.531)

Journal of Product & Brand Management Volume 20 Number 3 2011 190 204

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the Fanaticism dimension of consumer-based brand equity. The three as a group also rank highest on the product driver of equity and also very highly on the service driver. Trader Joes ranks high on the price driver but low on community. Whole Foods and Central Market rank at and near the bottom of the prices driver respectively but at the top of the community driver. Trader Joes ranks much higher than the other two specialty chains on the effort driver. In fact, Whole Foods ranks near the bottom of the list in terms of customer perceptions of effort, the informal attempts it makes to promote loyalty and relationships with its customers. Overall, it seems clear that very high product and service drivers are the basis for the high rankings overall for the specialty supermarkets, with Trader Joes also getting a boost from a better prices rating and a higher efforts rating. For the purely regional brands, there is a wide range of difference in ratings on the two dimensions of customer-based brand equity. The big three seem to be Meijer, Publix, and Harris Teeter, followed closely by HEB. Meijer is the highest of this group on the emotional loyalty dimension, and Publix is number two overall on the fanaticism dimension. Meijer is rated second behind Wal-Mart on the price driver, with Publix and Harris Teeter in the top half but not close to Meijer. Harris Teeter is number one on the programs driver and on the efforts driver. Publix and Harris Teeter follow closely on the efforts driver, but are in the lower half of the rankings in terms of programs, the formal loyalty and other programs designed to drive patronage. HEB follows Meijer closely on the prices driver but varies widely on some of the other drivers. What these four regional chains have in common is that they are independently owned (not a division of a larger chain) and they have grown organically from a single regional base. According to the 2010 National Grocers Association consumer survey report, regional chains are nimbler than their larger competitors, are often homegrown local favorites, and are deeply rooted in the communities that they serve (National Grocers Association, 2010). These top chains appear to be acting on those advantages, with strong consumer-based brand equity ratings, in many cases, even higher than the specialty supermarkets. For the other regional chains, the results are more disappointing. Tom Thumb and Jewel-Osco rank higher on the fanaticism dimension of consumer-based brand equity than HEB, but do not stand out on the emotional loyalty dimension or on any of the drivers of brand equity. ShopRite, a grocery cooperative out of New Jersey that serves several states in the Northeast, rates well on the programs and prices drivers, but poorly on both dimensions of consumer-based brand equity. The supermarket brands which are regional divisions of Kroger, SuperValu, and Safeway generally do poorly on the consumer-based brand equity outcome measures as well as the drivers of brand equity, except for programs (because of their loyalty card systems). The nationally recognized supermarket brands, except for supercenter Wal-Mart, score near the bottom of the list on both outcome dimensions of consumer-based brand equity and on most of the drivers of brand equity as well. Safeway ranks high on programs and moderately high on efforts, but low on product quality and prices. Kroger and Albertsons never appear near the top of the ratings on any dimension or driver of equity. Wal-Mart is unique. Wal-Mart is in the top six brands in fanaticism, but ranks very poorly in service, programs, and efforts, and in the middle of the eld in 199

product. The key to its popularity is simply the fact that is rates number one on the prices driver. Overall, it appears that consumers simply do not have strong feelings for the national chains, although they do for both their regional chains and the specialty chains.

Consumer-based brand equity and actual patronage behaviors

Although the objective of this study was not to gather detailed information on actual marketplace behaviors, customer reports of patronage frequency and spending per visit can serve as surrogates for shopping behaviors, realizing that locations and the total number of branded stores in each area drive a great deal of patronage decisions as well. Of the two dimensions of customer-based brand equity, only the emotional loyalty dimension is statistically related to the difference in patronage frequency among chains (Table XVI). The fanaticism ratings do not change very much at all as patronage frequency goes from twice a week to less than once a month.

Patronage frequency and supermarket type

For our sampled population, the frequency of shopping and spending per trip varied signicantly between the specialty foods brands and the regional and national brands (Table XVII). For national brands, 31.12 percent of respondents visited their supermarket twice a week, with an additional 47.25 percent shopping once a week. Similarly, 36.95 of regional brand respondents visited their supermarket twice a week, with an additional 47.1 shopping once a week. However, despite widespread discussion of the increased popularity of natural foods shopping, only 12.79 percent of the sample responded that they shopped at a specialty foods retailer twice a week and an additional 24.85 percent shopped once a week, 23.19 percent shopped once every two weeks, and 24.9 percent shopped approximately once a month.

Supermarket brands and patronage frequency

Interestingly, as shown below, Safeway and Publix are a very close number one and two in terms of the percentage of its customers who visit their store twice a week (Table XVIII). For emotional loyalty dimension of customer-based brand equity, Safeway ranks third to the lowest, and on the fanaticism dimension it ranks in the lower half. Publix, on the other hand, ranks very high on both the emotional loyalty and fanaticism dimensions of customer-based brand equity. Safeway has high rankings on formal loyalty programs, informal efforts to increase loyalty, and location. Publix ranks very high on several of the drivers of equity, and almost equal in terms of shopping visits per week without a formal loyalty program. However, Publix is rated very highly on the efforts driver that captures informal efforts at relationship building by the chain. After those two, no other supermarket chain has over half of its consumers that report visiting twice a week. HEB leads Meijer and Harris Teeter by a signicant margin, although if twice a week and once a week shopping is combined there is a smaller difference. And while the specialty supermarkets have by far the lowest patronage frequency, over 40 percent of respondents do visit a specialty supermarket at least once a week.

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Table XVI Consumer-based brand equity and shopping frequency

Dimension Emotional loyalty Fanaticism Twice a week 3.554 2.728 Once a week 3.458 2.584 Every two weeks 3.369 2.609 Once a month 3.432 2.617 Less than once a month 3.179 2.467 Sig. 0.041 0.220

Table XVII Patronage frequency by supermarket type

Dimension National brands Regional brands Specialty brands Twice a week 31.12 36.95 12.79 Once a week 47.25 47.10 24.85 Every two weeks 19.94 13.82 23.19 Once a month 2.53 7.68 24.90 Less than once a month 0.00 2.61 14.27

Table XVIII Patronage frequency by supermarket brand

Percent of shoppers visiting twice a week Safeway (national) Publix (regional) Tom Thumb (regional) HEB (regional) Vons (regional) Jewel-Osco (regional) ShopRite (regional) Wal-Mart (national) Albertsons (national) Meijer (regional) Harris Teeter (regional) Kroger (national) Ralphs (regional) Dominicks (regional) Whole Foods (specialty) Central Market (specialty) Trader Joes (specialty) 56.67 56.60 47.06 45.16 40.74 36.36 35.29 33.33 32.35 31.25 30.77 27.66 24.24 18.75 18.23 17.65 15.29 Percent of shoppers visiting once a week 33.33 37.74 35.29 48.39 37.04 38.64 52.94 44.44 44.12 56.25 53.85 53.19 46.97 56.25 27.09 23.53 30.59 Percent of shoppers visiting less than once a week 10.00 5.66 17.65 6.45 22.22 25.00 11.76 22.22 23.53 12.50 15.38 19.15 28.79 25.00 54.68 58.82 54.12

Spending per visit and supermarket type

The dollars per trip table (Table XIX) is largely displayed largely for interest, since dollars spent interacts with the number of trips per week (shown above). In addition, the location and market penetration strategies of the various chains are likely to determine dollars per visit more than does consumer-based brand equity. However, spending reports by our sample follow the same pattern as patronage. For national chains, an average of 29.75 percent of respondents spent less than $50 dollars per trip while 51.2 percent spent between $50 and $100. For regional chains, these gures were 39.4 percent less than $50 and 47.8 percent between $50 and $100. For specialty chains, 52.4 percent spent less than $50 Table XIX Spending per visit by supermarket type
Percent of shoppers spending less than $50 per visit National brands Regional brands Specialty brands 29.75 39.37 52.38

per trip and an additional 35.2 percent spent between $50 and $100. Wal-Mart is by far the leader in dollars spent per trip. However, since Wal-Mart is a supercenter with many more product categories than a supermarket, this is logical. The regional and national supermarket chains exhibit a variety of dollar per visit levels, with Harris Teeter, Publix, and HEB in the top ve (Table XX). What is most interesting among the sampled population is the low spending levels per trip at the specialty supermarket chains, especially since they also have the least frequent visits. Over 57 percent of Whole Foods Market customers purchased less than $50 per trip, with another 34.5 percent purchasing between $50 and $100.

Percent of shoppers spending between $51 and $100 per visit 51.17 47.78 35.02

Percent of shoppers spending more than $100 per visit 22.50 23.13 13.99

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Table XX Spending per visit by supermarket type

Percent of shoppers spending less than $50 per visit Wal-Mart Shop-Rite Harris Teeter Publix HEB Vons Safeway Kroger Meijer Jewel-Osco Albertsons Dominicks Trader Joes Ralphs Central Market Tom Thumb Whole Foods 11.11 17.65 23.08 28.30 32.26 33.33 36.67 36.96 37.50 40.91 41.18 46.67 47.06 50.00 52.94 52.94 57.14 Percent of shoppers spending between $51 and $100 per visit 66.67 58.82 69.23 58.49 61.29 55.56 50.00 45.65 43.75 45.45 41.18 33.33 41.18 40.91 29.41 35.29 34.48 Percent of shoppers spending more than $100 per visit 22.22 23.53 7.69 13.21 6.45 11.11 10.00 15.22 18.75 11.36 14.71 20.00 9.41 9.09 17.65 5.88 5.91

Interestingly, these results occurred even though the sample was drawn from zip codes in which a Whole Foods Market was located. Clearly, the specialty in specialty supermarkets does apply, even though both Whole Foods Market and Central Market carry a full supermarket product assortment. It appears from the data that the majority of grocery shopping still takes place in traditional supermarkets even among consumers who patronize specialty grocers on a relatively regular basis and feel much stronger about their specialty grocers than they do about their traditional supermarket. Across the board, the actual shopping behaviors of the sampled population indicate much higher frequencies of shopping and dollars spent per visit at the national and regional brand supermarkets compared to the specialty supermarkets. What is surprising about those ndings is that they y in the face of the very high levels of both the emotional loyalty and fanaticism dimensions of customerbased brand equity found for those specialty chains. Reasons for this disconnect might be found by looking at the drivers of equity as they differ across the store groups. Across the board, the specialty brands are weakest compared to the national and regional brands on three dimensions: programs (designed to promote loyalty such as discount coupons and loyalty cards), prices, and location. Central Market, with its small number of locations, ranks dead last on the location driver. With generally fewer numbers of specialty supermarkets in most markets, the location issue is logical except for the fact that the sample was drawn specically from areas with relatively easy (zip code) access to the largest specialty supermarket chain in the nation. Both Whole Foods and Central Market rank very low on the programs driver and the price driver. Whole Foods Market appears to suffer most from the perception that it is very high priced compared to competing supermarkets, ranking dead last on the price driver. However, both Whole Foods and Central Market rank high on both outcome dimensions of customer-based brand equity as well as the two most important drivers of equity. Apparently, wishing a brand well and being devoted to it as a concept does 201

not compel shoppers to spend the majority of their time and dollars there.

Implications for branding strategy

This study contributes important ndings relative to the strategic brand equity-building efforts of the major players in the supermarket industry and the effects of those efforts on the consumers attitudes toward their supermarket brands. A large proportion of consumers clearly have strong feelings about the supermarkets they patronize. In an industry with numerous choices in nearly all market areas and low switching costs, these feelings can translate into shopping loyalty, higher levels of spending, and even person-to-person promotion of the brand to others. The clear branding winners in this study appear to be the home-grown regional chains. Each of the four independently owned regional chains, Publix, Harris Teeter, HEB, and Meijer, ranks in the top half of all chains on the emotional loyalty outcome dimension of consumer-based brand equity, and three of the four (not HEB) rank in the top half on the fanaticism dimension. In addition, they rank highly on the service level and product quality and assortment drivers of equity in addition to their own unique other drivers which help form the image of their brand in the minds of consumers. These brands also rank high on actual patronage behaviors. For other chains, the key nding seems to be that high scores on the dimensions of consumer-based brand equity require high scores on both the service level and product quality dimensions as well, plus some other combination of drivers to differentiate the brand from competitors. The exception is Wal-Mart, whose dominance on the price driver of equity more than overcomes its low scores on other drivers. In terms of actual patronage, however, the programs driver (which includes loyalty programs and similar efforts) appears to help chains like Safeway and Kroger (and their divisions) overcome perceptions of poor service and/or product quality and achieve higher numbers of trips and spending than most

Customer-based brand equity, equity drivers, and customer loyalty Arthur W Allaway et al. .

Journal of Product & Brand Management Volume 20 Number 3 2011 190 204

of the chains with higher scores on the two outcome dimensions of consumer-based brand equity. For the supermarket brands that do not seem to stand out in the minds of customers, this study shows that there are equity drivers that have the potential to raise the levels of consumer-based brand equity. However, for some drivers, change is a very expensive proposition. Development of a formal loyalty program, for example, can cost many millions of dollars. Changing product quality and assortment and changing pricing can likewise prove very expensive. On the other hand, the importance to consumers of high service levels and informal efforts at maintaining customer relationships can be addressed much more inexpensively with customer service training and with consistent promotional messages. As discussed at the outset, customer-based brand equity in the supermarket industry is the result of a supermarket chains total brand-building efforts over time, which involves the daily implementation of the marketing message through service, product, price, and promotion decisions which are experienced in the stores by consumers. Emotional loyalty, and to a lesser degree fanaticism, are based on these efforts. We found several chains with very similar levels of overall consumer-based brand equity have built those levels with different strategies. Clearly, service and product quality are important to consumer-based brand equity across the board. However, some chains differentiate themselves with very high levels of those equity drivers. Other chains differentiate themselves with formal programs to promote shopping frequency, others with informal efforts at building customer loyalty. The combination of low prices and formal loyalty programs seems to drive a signicant amount of actual shopping behaviors. These unique combinations of equity drivers pinpoint specic supermarkets unique sources of distinct competency based and verify the existence of different consumer segments that are driven by different combinations of brand factors.

are signicant differences between consumers who can afford to choose grocers based on service and product quality and those who might be forced to choose based on price. Based on the results above, we would expect that the ndings in additional studies will reveal that emotion and involvement are important to supermarket consumers just as they are to consumers of other types of retail categories (and product categories), and that supermarket retailers that tap into those emotions have the opportunity to build much stronger brands than those who simply focus on providing groceries.

References
Ailawadi, K.L. and Keller, K.L. (2004), Understanding retail branding: conceptual insights and research priorities, Journal of Retailing, Vol. 80, pp. 331-42. Armstrong, J.S. and Overton, T.S. (1977), Estimating nonresponse bias in mail surveys, Journal of Marketing Research, Vol. 14, pp. 396-402. Bellizzi, J.A. and Bristol, T. (2004), An assessment of supermarket loyalty cards in one major US market, The Journal of Consumer Marketing, Vol. 21 Nos 2/3, p. 144. Blattberg, R.C. and Deighton, J. (1996), Manage marketing by the customer equity test, Harvard Business Review, Vol. 74 No. 4, pp. 136-44. Churchill, G.A. Jr (1979), A paradigm for developing better measures of marketing constructs, Journal of Marketing Research, Vol. 16, pp. 64-73. Gomez, M.I., McLaughlin, E.W. and Wittink, D.R. (2004), Customer satisfaction and retail sales performance: an empirical investigation, Journal of Retailing, Vol. 80, pp. 265-78. Grewal, D., Levy, M. and Lehmann, D. (2004), Retail branding and loyalty: an overview, Journal of Retailing, Vol. 80 No. 4, pp. ix-xii. Hair, J.F. Jr, Black, W.C., Babin, B.J. and Anderson, R.E. (2010), Multivariate Data Analysis, Prentice-Hall, Upper Saddle River, NJ. Jacoby, J. and Chestnut, R.W. (1978), Brand Loyalty Management and Measurement, John Wiley & Sons, New York, NY. Keller, K.L. (2003), Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 2nd ed., PrenticeHall, Upper Saddle River, NJ. Keller, K.L. and Lehmann, D.R. (2006), Brands and branding: research ndings and future priorities, Marketing Science, Vol. 25 No. 6, pp. 740-59. Kleinberger, H. and Badgett, M. (2007), Why advocacy matters to grocers, 2007 IBM Institute for Business Value, Customer-focused Grocer Study. Leone, R.P., Rao, V.R., Keller, K.L., Luo, A.M., McAlister, L. and Srivasta, R. (2006), Linking brand equity to customer equity, Journal of Service Research, Vol. 9 No. 2, pp. 125-38. National Grocers Association (2010), Consumer survey report, National Grocers Association and Consumer Insight. Pan, Y. and Zinkhan, G. (2006), Determinants of retail patronage: a meta-analytical perspective, Journal of Retailing, Vol. 82 No. 3, pp. 229-43. Reichheld, F.F. (1993), Loyalty-based management, Harvard Business Review, Vol. 71 No. 2, pp. 64-73. 202

Limitations and directions for further research

As with nearly all research, this study has limitations. Although the multistate sampling plan was specically designed to keep one highly recognized retail brand (Whole Foods Market) in the consideration set of all potential respondents, the choice of supermarkets to rate was left up to the sampled consumers. As such, most respondents selected their most typically shopped store(s), which is, to a signicant extent, a function of the spatial distribution of brands in their areas. In addition, because of the relatively upscale nature of the areas surrounding most Whole Foods locations, the sample is not generalizable to the typical US supermarket shopper population. Also, because of the geographic distribution of retail supermarket brands, most consumers had never shopped in the stores of regional chains outside their own market areas. There are signicant opportunities to continue and expand research into the effects of supermarket brand equity-building efforts on consumer commitment and patronage. One future research project in the area of supermarket retailing and brand equity might involve sampling from areas with both the same and unique brands present. Another would be to concentrate on details of actual shopping behaviors rather than attitudes. Another would focus on less afuent consumers to see if there

Customer-based brand equity, equity drivers, and customer loyalty Arthur W Allaway et al. .

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Reyes, S. (2005), For shoppers, its love, Brandweek, Vol. 46, p. 36. Rust, R.T., Lemon, K.N. and Zeithaml, V.A. (2004), Return on marketing: using customer equity to focus marketing strategy, Journal of Marketing, Vol. 68 No. 1, pp. 109-27. Wallace, D.W., Giese, J.L. and Johnson, L. (2004), Customer retailer loyalty in the context of multiple channel strategies, Journal of Retailing, Vol. 80, pp. 249-63. Wright, C. and Sparks, L. (1999), Loyalty saturation in retailing: exploring the end of retail loyalty cards?, International Journal of Retail & Distribution Management, Vol. 27 No. 10, pp. 429-40. Zeithaml, V.A., Berry, L. and Parasuraman, A. (1996), The behavioral consequences of service quality, Journal of Marketing, Vol. 60, pp. 31-46.

Corresponding author
Arthur W. Allaway can be contacted at: aallaway@cba.ua.edu

Executive summary and implications for managers and executives

This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benets of the material present. In the USA, grocery retailing is a multi-billion dollar industry. Signicant developments in the industry include brand consolidation, increased prevalence of store brands and intense competition for conventional supermarkets in the shape of supercenters like Wal-Mart and Target. Given these developments, nding effective ways to attract customers and secure their loyalty is crucial for retailers. It is proven that loyal customers benet an organization in ways that include purchasing more, a willingness to pay higher prices and positive word-of-mouth (WOM) recommendation. Retailers must therefore acquire knowledge of what drives customer-based brand equity that is created through various memory-based associations people develop about a specic brand. Customer recall of positive past shopping experiences inuences their future patronage and makes them less susceptible to competitor advances. Equity is driven by factors that are personal, product or market-related and include such as quality, price and the service provided by the store. Retailers can inuence customer-based brand equity over time through various decisions and activities associated with staff customer service training, promotions, product variety, store layout and involvement in the local community. Drivers of equity are essentially universal but the importance afforded to them might vary according to each consumer segment. The goal for any retailer should be to determine the ideal combination of factors that maximize consumer-based brand equity and help to successfully confront the challenges posed by rivals. In the present study, Allaway et al. examine consumerbased brand equity and aim to identify its key factors for typical supermarket patrons. A comparison of equity levels and drivers for national, regional and specialty supermarket chains is additionally carried out. The authors distributed a 203

questionnaire to consumers obtained from a mailing list and based in areas where supermarket brands enjoy a strong presence. A nal sample of 659 was obtained, with the majority being well-educated and afuent. The demographic prole of respondents was consistent with the areas where the sample was obtained. Participants reported shopping experience in either conventional or specialty stores but around 70 percent could relate to both types of retail outlet. Sufcient data was obtained for 22 chains including three nationally recognized brands, 16 regional brands and three specialty food brands. Data analysis revealed two factors consistently linked with brand equity and customer loyalty. The rst is labeled emotional loyalty as it reveals a strong attachment to a particular supermarket brand. Such consumers typically encourage others to patronize the store. Allaway et al. dene the second factor as fanaticism to reect consumer resolve to stay loyal to their favorite store and refuse to consider shopping elsewhere. Study ndings supported earlier research by identifying various key drivers of these brand-equity outcomes: . Service. The shopping experience is enhanced if a store has a sufcient number of employees who are friendly, polite and helpful. . Product. Respondents believe that products should be of high quality and superior to those offered by rival stores. Variety across all departments is also important. . Customer reward programs. People believe that stores should formally and informally acknowledge their patronage through reward schemes that might include coupons, discounts and relevant loyalty programs. . Effort to retain customers. The indication here is that consumers are impressed with supermarkets that try hard to build ties with them. . Price. Its ratio to quality was seen as important. . Layout. Comments here related to departments and products being easy to nd. . Location. The appeal of stores increases when they are within easy reach. . Community involvement. Consumers are impressed with supermarkets that benet their local community through such as educational or social initiatives. For both emotional loyalty and fanaticism, respondents indicated that effort to retain customers is most important. Product, service, community involvement and prices also impacted on the emotional loyalty dimension. That ndings likewise reveal the relative insignicance of customer rewards shows agreement with other studies. It was presupposed that size, prole and marketing power would mean that national brands rated strongly on consumerbased brand equity. However, these supermarkets scored below both regional and specialty stores on both emotional loyalty and fanaticism dimensions. A comprehensive analysis was also carried out to rank the 22 supermarket chains with regard to each equity driver. Indications are that certain brands focus more on specic areas. Another nding was that the three specialty brands are among the top scorers for service. Considerable differences in customer-based brand equity levels were evident here. It was also apparent that supermarket chains achieving high equity scores did so with

Customer-based brand equity, equity drivers, and customer loyalty Arthur W Allaway et al. .

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unique combinations of equity drivers. The authors noted that: . For specialty stores, high ratings were mainly due to product and service drivers. . Disparity exists among regional brands for both emotional loyalty and fanaticism. The four independently ownedones generally performed better and this could be attributed to being of genuine local origin, strong community presence and more nimble than larger rivals. Supermarkets which are regional divisions of national concerns generally rate much lower. . National brands rank very low for the two dimensions of customer-based brand equity and most brand equity drivers. Notable ndings here included Safeways high rating for customer rewards and Wal-Marts for price, which is considered key to the chains popularity. Overall, though, Allaway et al conclude that consumer feelings are much stronger towards specialty and regional stores than to national operators. The authors also note that patronage decisions can be inuenced by location and the total number of branded stores in an area. Differences in patronage frequency are also related to emotional loyalty but not to the fanaticism dimension. Results indicated that shopping frequency and amount spent was higher for national and regional chains than for specialty brands. A reason forwarded for this that specialty stores tend to be more expensive and place little emphasis on reward schemes. It suggests that strong positive feelings towards a certain brand type do not necessarily lead to greater patronage.

Ultimately, achieving a high level of consumer-based brand equity requires strong performance in service and product quality. A combination that also includes good scoring for certain other drivers can help differentiate a brand from the competition. Wal-Mart is considered one exception as it performs poorly in both service and product quality and attains its positioning almost solely through price. Safeway and Kroger likewise rate low on these key drivers but the reward programs driver means that shopping frequency and spend is higher for these chains than for most others with high service and product quality ratings. Allaway et al. believe that the research highlights drivers able to increase consumer-based brand equity. They do, however, warn that an emphasis on certain drivers can be costly. For instance, creating formal loyalty schemes involves signicant expense, as can changes to pricing or the quality and range of products offered. In contrast, improving service levels and maintaining customer relations through training and promotional messages is a more economical option. Future studies might include less afuent consumers likely to be greatly inuenced by price. A focus within areas where both the same and unique brands operate is another idea. The authors additionally suggest investigating actual behavior rather than attitudes. (A precis of the article Customer-based brand equity, equity drivers, and customer loyalty in the supermarket industry. Supplied by Marketing Consultants for Emerald.)

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