Falcon's Invoice Discounting: Your Path to Prosperity
Short thesis
1. 1
How does a brand build loyalty and relationship with
consumers online?
By
TERESI Laure
ESPEME Business School
2013
Programme Director Professor Guintcheva
MSc in Management Marketing
2. 2
SUMMARY
INTRODUCTION................................................................................................................................... 4
Part 1: RELATIONSHIP MARKETING IN THE INTERNET AGE .................................................... 5
Chapter 1: Fundamental concepts ....................................................................................................... 5
1. Customer’s satisfaction and loyalty......................................................................................... 5
1.1. Satisfaction...................................................................................................................... 5
1.2. Loyalty............................................................................................................................. 5
1.3. Satisfaction and loyalty relationship................................................................................ 5
2. Loyalty and brand equity......................................................................................................... 5
2.1. The brand equity.............................................................................................................. 5
2.2. Brand relationship with customers .................................................................................. 5
2.2.1. Brand attachment and self-image congruence......................................................... 5
2.3. Loyalty and brand equity relationship............................................................................. 6
2.3.1. The impact of brand personality on commitment and attitude towards the brand... 6
Chapter 2: Relationship marketing on Internet ................................................................................... 6
1. The Internet revolution............................................................................................................ 6
1.1. Definitions and figures .................................................................................................... 6
1.1.1. Definitions............................................................................................................... 6
1.1.2. Some definitions...................................................................................................... 6
1.2. The consumer online ....................................................................................................... 6
1.2.1. Specificities ............................................................................................................. 6
1.2.2. Word of mouth ........................................................................................................ 7
1.2.3. E-influencers............................................................................................................ 7
2. Internet serving marketing....................................................................................................... 7
2.1. A tool to achieve multiple objectives .............................................................................. 7
2.1.1. E-commerce............................................................................................................. 7
2.1.2. Communicate........................................................................................................... 7
2.1.3. The new tools of loyalty programs.......................................................................... 7
2.1.4. Brand building......................................................................................................... 7
2.2. Relationships between trust, commitment, and satisfaction online................................. 7
PART 2: DIGITAL BRAND EXPERIENCES: building relationship with the customer ...................... 8
Chapter 1: The brand and e-loyalty..................................................................................................... 8
1. The brand on the internet......................................................................................................... 8
1.1. Existence of the brand on social media ........................................................................... 8
1.2. Shared brand.................................................................................................................... 8
3. 3
2. The e-loyalty framework......................................................................................................... 8
2.1. Brand building................................................................................................................. 8
2.1.1. Image Building........................................................................................................ 8
2.1.2. Community Building............................................................................................... 8
2.2. Trust and security ............................................................................................................ 8
2.3. Customer service ............................................................................................................. 9
2.4. Website and technology .................................................................................................. 9
2.5. Value propositions........................................................................................................... 9
Chapter 2: CASE STUDY................................................................................................................... 9
1. Nike + Running community.................................................................................................... 9
1.1. Brand Building .............................................................................................................. 10
2.1. Trust and security .......................................................................................................... 10
2.2. Customer Service........................................................................................................... 10
2.3. Website and technology ................................................................................................ 10
2.4. Value propositions......................................................................................................... 10
CONCLUSION ..................................................................................................................................... 11
REFERENCES...................................................................................................................................... 12
4. 4
INTRODUCTION
The recent years have seen a rapid increase in Internet consumption. With the
development of electronic commerce and online shopping, brands give a greater importance
to building relationships and loyalty with consumers online in their marketing strategy. Brand
loyalty has become a focal point of interest for marketing researchers.
The concept of brand loyalty associated to consumers online is called e-loyalty. E-
loyalty refers to the intention from an online customer to visit a website again, or considering
a future purchase online (Cyr et al., 2005; Koernig, 2003). It is seen as an important key
success factor for brands (Reichheld and Schefter, 2000). Indeed, building relationships and
loyalty with the brand is a great asset in establishing sustainable competitive advantage, return
on investment and high brand equity. Customer loyalty is the result of successful brand
strategy in competitive markets that creates value for consumers.
The challenge for brand is how to influence loyalty in an online environment.
Understanding how to create customer loyalty in online environment is a complex process.
Few studies have established that e-loyalty is related to customer satisfaction (Zeithmal et al.,
1996), trust (Anderson and Srinivasan, 2002), commitment (Lee et al., 2001) and design of
the website (Simon, 2001).
This essay includes research in the field of loyalty and relationships toward the brand
in an online environment to understand how brand builds loyalty and relationship with
consumers online.
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Part 1: RELATIONSHIP MARKETING IN THE INTERNET AGE
The relational marketing refers the marketing activities intended to create, develop and
maintain strong relationships (Morgan and Hunt 1994). The ultimate goal of relationship
marketing is to strengthen strong relationships and build loyalty towards the brand (Ndubisi
and Chan, 2005).
Chapter 1: Fundamental concepts
1. Customer’s satisfaction and loyalty
1.1. Satisfaction
Customer satisfaction is defined by Day (1984) as a consumer evaluation after a purchase
decision. According to Achour (2006), customer satisfaction is “a positive feeling a consumer
has after a consumption experience, and springing out of a comparison between the
expectations from a product or a service and the performance perceived from it.”
1.2. Loyalty
Olivier (1999) defines brand loyalty as “"a deeply held commitment to rebuy or repatronize a
preferred product/service consistently in the future, thereby causing repetitive same-brand or
same brand-set purchasing, despite situational influences and marketing efforts having the
potential to cause switching behavior." Researchers have defined two different dimensions:
behavioral and attitudinal loyalty (Oliver, 1999; Zeithaml, 2000). Czepiel and Gilmore (1987)
define customer loyalty from an attitudinal dimension as a desire to pursue a relationship with
a brand. From the behavioral dimension, Reibstein (2002) define loyalty as repeat patronage.
Different loyalty tools are available to attract and retain customers such as software, card
programs, points programs, newsletters and e-zines.
1.3. Satisfaction and loyalty relationship
Many authors have shown relationship between consumer satisfaction and loyalty to a brand
(Magin et al., 2003; Park and Lee, 2005) and have proven that satisfied customer tend to be
loyal and dissatisfied customers tend to move to another brand (Heskett et al,. 1993). Loyalty
is a consequence of consumer satisfaction and the consumer’s purchase behavior is influenced
by the satisfaction of the product he buys (Zeithmal et al., 1996). Thus, the satisfaction of the
consumer has a direct effect on loyalty by affecting attitude and purchase intention.
2. Loyalty and brand equity
2.1. The brand equity
In the marketing literature, brand equity is defined as the relationship between customer and
brand (Wood 1997). Aacker defines the brand equity as “a set of assets linked to a brand’s
name and symbol that adds to (or subtracts from) the value provided by a product or service to
a firm and/or that firm’s customers”. He also argues that brand equity is a combination of
brand loyalty, brand awareness, perceived quality and brand’s associations. Another definition
is that brand equity refers to the added value of a brand to a company (Kotler, 1997).
2.2. Brand relationship with customers
2.2.1. Brand attachment and self-image congruence
Today, brands are searching ways to create emotional connections with consumers. Develop
strong emotional attachment to the brand among consumers can lead to stronger brand loyalty
and brand performance (Park et al. 2010). Self-congruence plays an important role in creating
emotional brand attachment (Park et al. 2010), which is defined as the match between the
consumer's self and the image of the brand (Aacker 1999). Self-congruence improves
attitudes, affection and behavior of the consumer towards the brand (Aaker1999 & Grohmann
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2009). Overall, these authors say that greater the attachment to the brand is, greater a
consumer will be bound and loyal to the brand.
2.3. Loyalty and brand equity relationship
Brand loyalty is considered to be the strongest path which leads to brand equity and has a
positive effect on brand equity on it (Atilgan et al., 2005). Products are sold not only about the
characteristics and quality of the products but also about beliefs in the brand. Therefore,
brand loyalty is emphasized to create and retain loyalty of customers. Consumers who are
loyal to a brand are willing to try to adopt brand extensions (Lassar, Mittal & Sharma, 1995).
2.3.1. The impact of brand personality on commitment and attitude
towards the brand
According to Aaker (1997), brand personality is "the set of human characteristics associated
with a brand”. Today every company is trying to build a strong and distinctive brand image to
attract the customer. For example, Coca-Cola is considered to be more “honest” by consumer
whereas Pepsi is trying to be more “young”. With these own characteristics, consumer may
meet their personality traits (Aaker 1996). Brand personality creates value for consumers and
brand and impact consumer choices, attitudes and preferences (Biel 1993). Researches have
shown that positive attitudes will favor brand commitment, which is defined as the desire to
retain value relationship with consumers (Dobscha and Mick 1998). Increase commitment
level generates customer loyalty (Lee et al., 2001).
Chapter 2: Relationship marketing on Internet
1. The Internet revolution
1.1. Definitions and figures
1.1.1. Definitions
Internet represents the center of attention for brands and especially e-marketers. 2.7 billion
people are online in 2013, which represents almost 40% of the world’s population (ICT Facts
and figures). People get used to online sales, which show the importance of e-commerce sites.
Global online sales will reach $963.0 billion at the end of 2013 predict Goldam Sachs. As
today’s world becomes independent on technology, internet should be an important part of the
marketing strategy.
1.1.2. Some definitions
Social network – applications which allow users to build personal website for exchanging
personal content with other users (Palmer & Koenig-Lewis, 2009)
Blog – online journal where people post images, ideas and links to other websites (Weber)
Forum - sites allowing user to exchange information around special interests (Palmer, 2009)
RSS – web feed formats which are used to publish frequently updated content
Podcast – digital media file available on the Internet using syndication feeds for playback on
portable media players and computers
1.2. The consumer online
1.2.1. Specificities
Today, e-consumers are hyper connected. They use technology as part of their lives, from
laptop to phone to reader to iPad. They have different attitudes when buying online and
acquiring information. E-consumers are empowered with transparent prices and more
information. They have expectations such as competitive prices service, convenience, speed
of delivery and security. We also assist to an emergence of e-influencers such as influential
bloggers which publish their opinions online through social media.
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1.2.2. Word of mouth
Word of mouth is a “Communication not originated by the sender that is passed on to others
after the original marketing communication messages have been transmitted” and is referred
as word of mouse in an online environment (Pickton & Broderick, 2005). Word of mouth
influences the purchase decision because personal sources are considered as trustworthy
(Buttle 1998). More precisely, it has an influence on awareness, perceptions, attitudes, and
behavior of the consumer. Word of mouse can impact positively on the purchase decisions
(Engel et al., 1969) as well as negatively (Tybout et al., 1981), especially by e-influencers.
1.2.3. E-influencers
According to Landrevie and Levy (2013), e-influencers are the ideal customers who buy
online and then post reviews which can influence a lot of customers. They are central to
consumer decision-making.
2. Internet serving marketing
2.1. A tool to achieve multiple objectives
2.1.1. E-commerce
According to Vladimir Zwass ‘Electronic commerce is sharing business information,
maintaining business relationships and conducting business transactions by means of
telecommunications networks’. E-commerce able customers to shop at any time all year round
from almost any location. Through internet, consumers have more choices, can compare
prices at just one click, get high quality delivery process and can find substantial discounts.
2.1.2. Communicate
Several brands encourage the communication with their customers to maintain regular contact
and encourage dialogue. According to Woods and Hebron (2001), communication includes
word of mouth, phone conversation, email and through internet. The effectiveness of
communication between the consumer and the brand influences trust, satisfaction and loyalty.
2.1.3. The new tools of loyalty programs
According to Pantea & Veghes (2008), the new tools are: sponsored links, social networks, e-
newsletter, blogs, RSS feds, forums and portal.
2.1.4. Brand building
As discussed in literature, brand building allows developing brand loyalty (Bhat & Reddy,
1998; Yoo, Donthu, & Lee, 2000). This concept will be explained in the part 2.
2.2. Relationships between trust, commitment, and satisfaction online
Brand trust is a relevant factor in the process of developing and maintaining consumer
relationships and thus contributes to the success of a brand (Morgan and Hunt, 1994). Brand
trust is defined as “the willingness of the average consumer to rely on the ability of the brand
to perform its stated function” (Chaudhuri and Holbrook 2001). To create brand trust,
reliability and honesty must be provided by the brand to consumers (Doney and Cannon,
1997). Relationship of satisfaction, trust and commitment are components of satisfaction
attitudes and future intentions for the consumer (Garbarino & Johnson). These three factors
are relevant factors that affect loyalty (Vuuren, Roberts-Lombard & Tonder, 2012).
The next part will explain how a brand built itself on Internet and how it builds relationships
and loyalty with the consumer online.
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PART 2: DIGITAL BRAND EXPERIENCES: building relationship with the customer
Chapter 1: The brand and e-loyalty
1. The brand on the internet
1.1. Existence of the brand on social media
Social media becomes a dominant key in marketing strategies. Kaplan and Haenlein (2010)
define this term as “a group of internet-based applications that build on the ideological and
technological foundations of Web 2.0, and that allow the creation and exchange of user-
generated content”. Social media includes social network, forums, blogs, podcasts, video, and
pictures (Weber, 2009). It is essential to exist on social networks appropriately: develop
corporate blog, communicate through Facebook and Twitter, use video sharing sites and
launch viral campaigns (Landrevie & Levy, 2013).
1.2. Shared brand
Online reputation refers to the opinion issued - accessible through search engines, information
websites, and social network - on the qualities of a brand which can lead to trust or mistrust.
A monitoring system must be implemented to control ‘digital footprints ', reduce the negative
comments, engage e-users and influence e-influencers. A shared brand must develop a
personal relationship with its community and public to influence them, which is part of the
experience it creates with its customers (Landrevie & Levy, 2013).
2. The e-loyalty framework
Understand how the e-loyalty consists will help brands to build good relationship and loyalty.
The e-loyalty framework (Gommans et al., 2001) presents different factors of e-loyalty which
are brand building, trust and security, customer service, website and technology, and value
proposition.
2.1. Brand building
2.1.1. Image Building
In the literature, brand image building is presented as a strategic element for establishing
loyalty to the brand (Yoo, Donthu & Lee, 2000). The Internet offers unique possibilities of
interactive brand building which are not available through traditional mass media such as
virtual communities. Website content and domain names are important factors in enhancing
brand image. Indeed, customers prefer well known and simple website names and URL.
2.1.2. Community Building
Internet should not be an impassive network but as a means of creating global and dynamic
conversations (Levine et al. 2000). By organizing virtual communities, brands will get
impressive returns from e-consumer and will faster customer loyalty. Community should be
customer-centred communications such as the company Napster which has successfully
implemented a network community allowing music fans to exchange music files. Well-run
communities allow brand creating and strengthening relationships, trust and loyalty with
consumers online. They allow maintaining brand awareness which is essential to retain
consumers.
2.2. Trust and security
Transactional security and privacy have an important role in generating e-loyalty (Hoffmann
et al., 1999). Ratnasingham (1998) states that fear of online credit card fraud impacts
customers and leads to a refusal to purchase online. Trust is also an important factor in the
online buying process (Gommans, 2001). Brand trust leads to a reduction of uncertainty and
usually conducts to attitudinal loyalty. Brand trust in particular can help a brand to be seen as
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safe, honest, and reliable. In addition, a “third party approval” is a god way to enhance brand
trust.
2.3. Customer service
Logistic system should be able to guarantee an order fulfillment and a fast delivery as this will
lead to customer satisfaction and loyal behavior. Moreover, it is important that the logistic
system allow different ways of delivering products in order to meet the preferences of
consumers. According to Helmsley (2000), customer service is an important element to
consider for e-marketers. The customer service should include frequently asked questions to
help customer in the buying process and provide online representative phone numbers. By
buying a product online, the e-consumer cannot experience the product, which provides an
effect of insecurity. To overcome this, e-business should offer a well-known brand.
2.4. Website and technology
According to Smith (2000), the first impression given when visiting a website as well as its
ease of use is an important factor. Fast page loads, easy navigation, personalized interface,
server reliability, fast response times, checkout and quick shopping represent all the elements
which lead to loyalty toward the website. Convenience and site design, such as style site,
colours, graphics, layout and typography lead to customer satisfaction, which influence the
loyalty towards the website (Szymanski, 2000). According to Gommans & Krishnan, the
content of the website must match consumer needs and especially fit the preferences of its
targeted customer group. Many languages must be available to allow access to all and the
change of the content must be adapted to local conditions and culture. Amazon has perfectly
implemented this concept.
2.5. Value propositions
In addition to ease of use, update and good content, websites should have strong online value
propositions. Product customization and interactivity are two important components of e-
loyalty in e-commerce. According to Modem Media survey, 52% of online consumers said “I
prefer Web sites that have information or products customized to my preferences”. Dell is a
perfect example of company which proposes product customization by providing an instance
of choice board (Slywotzky, 2000). The choice board system allows customer designing their
own computer by choosing components, attributes and different options from a menu.
Customers which customize their own products to their meet increase customer satisfaction
for the product. Moreover, the online consumer involvement in product design creates strong
relationship with the brand which leads to brand loyalty.
Chapter 2: CASE STUDY
1. Nike + Running community
Nike + Running support and connect customers around the world. Nike+ Running community
empowers athletes to measure and share their experience across the globe. It is a community
of information and an online shop. Nike + Running application for iPhone and Android are
available for free with faster performance allowing customers to share their experience. Social
sharing is enhanced with the integration of Nike + Running in Facebook. Nike + Running is a
multi-channel with a mix of Nike and Apple technologies. Nike represents a truly connected
community of sport. James Martin, Vice President of Nike, said: “We are introducing a new
chapter that will take the running experience to a new level in terms of connectivity,
community, social sharing and data-driven insights.” Nike + Running community is thus an
interesting case study due to the unique way the brand market itself.
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1.1. Brand Building
The website address, Nikeplus.nike.com, holds the name of the brand, which makes the
website more credible to new online customers and allow them to know what quality to
expect through the website. The website creates dynamic conversations between e-customers
and employees through a forum, which creates and strengthens relationships between
customers and the brand. By this way, the brand controls what is posted in the forums, avoid
negative world of mouth and create some kind of credibility by providing expert advises and
help to e-customers. Nike uses the same concept of social network for Facebook and Twitter
by posting a link on the front page to join these social networks. These social networks allow
friends of customers to be exposed to the brand and get them to visit the website. By engaging
e-consumers, brand enhances brand awareness, trust, and loyalty with e-consumers.
2.1.Trust and security
Nike is a well-established brand, which can bring some credibility turned into trust towards
Nike + website. Chaffey (2009) states that consumer risk perceptions should be reduced
whereas trust should be increased to generate positive belief towards online reputation. The
website Nike + is secured by Entrust Digital Security in terms of payment and passwords, a
trustworthy third-party which create credibility. Bowen and Shoemaker (1998) said trust is
one of the most important elements of customer's commitment. Commitment is claimed to be
a necessary condition for loyalty.
2.2.Customer Service
By respecting e-consumers’ needs and giving them a chance to participate to the forum, the
loyalty towards the brand is improving. Nike + offers multiple delivery choices, free shipping
on returns products, and provides online representative phone numbers for different countries.
According to Chaffey (2009), customer service should be high quality because if consumers
need and expectations are not satisfied, this will not lead to customer satisfaction, which
makes it hard to create online relationships. Nike should keep a clear consistency between
their image and customer service they provide. Nike + offers the opportunity to consumers
online to personalize their own products and provides high quality customer service which
lead to customer satisfaction (Helmsey, 2000). Nike + provides a customer service that
perfectly meet the requirements established in the e-loyalty framework.
2.3.Website and technology
Nike + community and website areas are separated, which makes it is easier to navigate the
website. According to Nielsen and Tahir (2001) argue that elements with different objectives
should be separated so that it does not create confusion for the consumer. The visual aspects
of Nike websites are consistent such as fonts, colors, navigation bars, which makes a reliable
brand image and offers a complete experience for the consumer online.
2.4.Value propositions
Athletes can visit nikeplus.com to access to their data including accumulated points from
Nike Fuel, devices from Nike + and comments from friends. Nike offers customized
information as well as customized products which create relationships between e-consumers
and Nike. Consumers can see the community as an additional value by providing knowledge
of how to best possible utilize the products, which can lead to loyalty toward the brand.
Sivadas and Baker-Prewitt (2000) argued that “there is an increasing recognition that the
ultimate objective of customer satisfaction measurement should be customer loyalty”. Nike is
already an established brand with e-consumers that have experience with products.
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CONCLUSION
This study sought to discuss the concept of brand loyalty and how this can be built in
an online environment. There is a growing influence and importance in the relationship
between e-service quality, e-satisfaction, e-trust and loyalty in online businesses. This essay
validates the framework of e-loyalty (Gommans et al., 2001), shows the importance of loyalty
in an online environment and validates new relationships such as usefulness and social
presence on e-loyalty. This essay also shows that social presence has a direct impact on e-
loyalty.
The concept of brand loyalty was examined in the context of Nike +Running online
community through the e-loyalty framework and has shown that loyalty can be created in
multiple ways. The variables include brand image, customer service, security and trust,
technology and website, and value propositions, which are related to customer satisfaction
and customer loyalty.
Firstly, an online forum creates long-term relationships by engaging e-customers and
employees in an interactive dialogue and thereby increase brand loyalty. Secondly, this
community give reliability towards the brand by giving expert advises, which is also seen as a
supplementary service and conduct to brand loyalty. Finally, this community allows
consumers online to customize their own products, which has been seen as a component of e-
loyalty. The case of Nike + Running is considered successful due its singular way of creating
interaction with consumers online.
Due to the limitations of this essay, recommendations are suggested for further
research for the purpose of enhancing the study of the customer online loyalty. Establishing a
survey to a representative and appropriate group could allow observing behaviors and
attitudes towards Nike + Running Website.
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