The effects of advertising spending on brand loyalty in services

Purpose: This paper aims to model the effect of advertising spending on brand loyalty by examining the simultaneous effects of advertising spending, store image, perceived quality and satisfaction on brand loyalty. Design/methodology/approach: A proposed model is compared with three competing models of the relationships amongst, and impact of, independent variables on brand loyalty. Data from the banking and discount store services in South Korea are used to examine the indirect effects of customer perceptions of advertising spending on brand loyalty. Findings: Results elucidate the complexity of advertising spending effects on brand loyalty, with mediating roles played by store image, perceived quality and satisfaction. Significant results obtained in both banking and retail services differing in firm-customer relationships suggest that the findings are robust. Research limitations/implications: Future research might test the proposed research model in other cultures and conduct cross-cultural comparisons. Other variables such as brand associations, brand trust, advertising recall might uncover additional cognitive and attitudinal structural relationships with brand loyalty. Originality/value: The paper compares competing models of the variables of interest, which has not been done before, and indeed seen quite infrequently in scholarly research in marketing. Unlike in previous studies, this paper examines the simultaneous relationships and the mediating roles of store image, perceived quality and satisfaction in the impact of perceptions of advertising intensity on brand loyalty.