A Study on the Impact of Airline Corporate Reputation on Brand Loyalty

This study analyzes the impact of airline corporate reputation on brand loyalty. An empirical analysis is carried out via a questionnaire survey of Korean airline passengers. The results from 250 respondents are then investigated using structural equation modeling. Airline corporate reputation is shown to have a significant influence on brand image, price, perceived service quality, and brand preference. In addition, price, perceived service quality, and brand preference have a statistically significant influence on behavioral loyalty and attitudinal loyalty.


Introduction
A firm's positive reputation and the brand loyalty it cultivates can serve as major advantages.Product quality is relatively easy to imitate.However, the roles of brand image, price, service quality, brand preference, and brand loyalty cannot be easily imitated because they reflect differentiated competitiveness.When evaluating a firm, reputation is often seen as a critical intangible asset, and it can be either positive or negative.Earning a good reputation requires significant effort.Once damaged, it is difficult to recover.Moreover, a negative reputation not only causes the firm's image to degrade, it also has the potential to create a crisis for the firm (Dowling, 1986).
A reputation is a product that is created and accumulated for specific reasons.It is not an accidental phenomenon.In general, it is rare for consumers to purchase goods without recognizing the brand.If a positive image or good reputation is absent, brand loyalty is not created.Therefore, because it is difficult for consumers to understand the advantages and profit of a product or service in circumstances where the recognition of a firm is established, a good reputation becomes much more critical.A firm's reputation is not accumulated as time passes.Airlines, for example, need to actively build, maintain, and manage reputations.However, studies on airline reputations are insufficient at present.Therefore, this study investigates the influences of airline corporate reputation on brand loyalty.In particular, the influences of airline corporate reputation on brand image, price, perceived service quality, and brand preference are analyzed, and the influences of such variables on behavioral loyalty and attitudinal loyalty are investigated.

Theoretical Background
The concept of reputation has been controversial in the academic world due to concept differentiation.Studies in the 1960s and 70s focused on image rather than reputation, and after the 1980s, focus was placed on the relationship between reputation and image (Grunig, 1993;Balmer, 1997).Crissy (1971) argued that the image and reputation of a firm were interchangeable concepts when image was defined as the overall aggregate of values a firm possessed rather than as a fragmentary and cognitive concept.In the late 1980s, scholars started to pay more attention to the relationship between corporate image and reputation.This interest was at least in part triggered in 1984 when an American magazine, Fortune, attempted to determine the most admired corporations (Deephouse, 2002).Gotsi & Wilson (2001) summarized the characteristics of corporate reputation, and their work has often been used to create definitions of corporate reputation.They argued reputation was a dynamic concept that required time to establish.In addition, there was a mutual association between corporate reputation and corporate image.Accordingly, they defined corporate reputation as a product that was evaluated by the public over long periods.Moreover, for firms with multiple branches, each branch can develop its own reputation based on its interactions with the public.Corporate reputation is a top priority for consumers making purchasing decisions.When firms successfully manage factors related to that reputatione.g.ethical behavior, honesty, eco-friendly practices, and attentiveness to consumer demandthey wield a powerful competitive advantage, and when they fail to manage these factors, they suffer (Caudron, 1997).Brand image can be defined as a psychological structural system possessed by consumers.It is formed from the association of indirect factors of a variety of information related to products, and it can be interpreted by the sensory organs of consumer.Separate from the product itself, it is a complex concept that includes emotions, attitudes, and associations formed in the minds of consumers (Jung, 1984).Dobni and Zinkhan (1990) argued that brand image was an intellectual phenomenon formed through the emotional and rational judgment of consumers, and it was composed of two factor typesperceived factors and emotional factors.
Regarding corporate reputation and brand image, Gale (1994) and Rust et al.(1995) concluded that there was a mutual influential relationship between corporate reputation and brand image because they developed customer value methods.Cretu & Brodie (2005) contended that corporate reputation could have a positive influence on brand image.In his study on the influences of corporate social responsibility (CSR) activities on brand image and perceived service quality, Lee (2011) verified that corporate reputation could positively influence brand image.Based on the literature, this study draws the following hypothesis.
Hypothesis 1: An airline's corporate reputation will significantly influence brand image.Shapiro (1968) asserted that because price was influential information and it was concrete and measurable, consumers confronted prices with previously held, significant convictions.Thaler (1985) discovered that consumers tended to evaluate products negatively when the standard price in their minds was higher than the suggested price, and vice versa.This was consistent with other studies that found that internal reference prices stored in memory become a critical variable for consumers evaluating products that they considered for purchase.Jacoby and Olson (1977) classified price into objective price and perceived price.Objective price referred to the price of the actual product and perceived price referred to the price that consumers felt.Price can be defined as the amount of currency required to purchase a product or service, and an aggregate of exchange value on using or possessing a product or privilege of service (Kotler, 1991;Stanton, 1987).
Sirrka & Peter (1997) defined price as an aggregate of the financial costs of a product or service.Cryer and Ross (1997) argued that consumers were willing to pay a premium price for products made by a firm they considered ethical, and Quagrainie et al. (2003) claimed in their study that a quantitative corporate reputation cultivated through social responsibility activities could be an optimal index of product evaluation and price premium.In addition, Fombrun (1996) contended that reputation led to premium prices, and through such a process, a firm could also enjoy a market share premium.This study draws the following hypothesis on corporate reputation and price based on the literature.Hypothesis 2: An airline's corporate reputation can significantly influence price.
Definitions of perceived service quality are disordered and lack unity.The service quality concept has been defined in various ways.Bitner & Hubbert (1994) defined it as a general impression made by a consumer regarding the relative inferiority or superiority of service.Zeithaml (1988) defined it as an evaluation made by consumers on the general inferiority or superiority of service.Gronroos (1984) argued that service quality was perceived by consumers via a comparison between the perceptions of an actual service and the expectations of that service.Bettman and Park (1980) argued that as a general feeling toward a brand that could not be seen, perceived service quality referred to an overall dimension of quality characteristics and reliability that a consumer perceived with respect to a brand.They asserted that consumers perceived the general and overall quality of a certain product rather than detailed characteristics.Lee (2001) concluded that corporate reputation positively influenced perceived service quality.Based on the literature, this study draws the following hypothesis regarding corporate reputation and perceived service quality.Hypothesis 3: An airline's corporate reputation will significantly influence perceived service quality.
Brand preference refers to a degree of obsession and patronage held by customers toward a certain brand.It refers to the preferable attitudinal and behavioral responses of customers toward one or more brands in a certain period and certain scope (Engle, 1986;Jacoby, 1971).Tucker (1964) also asserted that brand preference was present for a brand that consumers would purchase over another brand.In the event that a consumer did not have any knowledge regarding a particular brand, Tucker (1964) explained that consumers would select a brand based on influence.In addition, he argued that rather than a concept limited to a singular brand, brand preference made a brand more preferable when compared to a disliked brand.Therefore, brand preference indicated that consumers selected the most preferable product among various brands before they made a purchase, and they tended to purchase the preferable product.Lee (2007), verified that corporate reputation could influence brand preference and brand loyalty, and Kim et al. (2009) concluded that as the level of social reputation increased, brand reliability increased.Likewise, as the level of brand reliability increased, brand preference increased.Thus, this study draws the following hypothesis on corporate reputation and brand preference.
Hypothesis 4: An airline's corporate reputation will significantly influence brand preference.
Brand loyalty refers to a deep immersion in a pertinent brand that causes consumers to buy preferable products or services continuously.Loyal customers tend to repurchase the identical brand despite efforts (e.g.marketing campaigns) made by companies to bring about brand conversion (Oliver, 1997).Jacoby and Chestnut (1978) classified brand loyalty into attitudinal and behavioral loyalty.They defined brand loyalty as a powerful preference for a brand as a weighted (not randomized) behavioral response that appeared for one or a few brands continuously.Engel & Blackwell (1982) explained brand loyalty as a complex approach associated with attitudinal or behavioral approaches.They argued that brand loyalty occurred via preference, attitudinal, and behavioral responses on one or a few brands as consumers made purchases repeatedly over a long period.Lim (2002) mentioned that brand image from a consumer perspective could enhance attitudinal loyalty, and You ( 2004) argued in his study on brand asset component factors that brand image could influence brand loyalty.In addition, Kim (2007) claimed that brand image had significantly positive effects on brand loyalty via marketing communication.Aaker (1992) asserted that the degree of brand loyalty could be understood by modifying prices and brand characteristics.Lee (2011) claimed that the relationship between marketing activities and brand loyalty, and the relationship between price and brand loyalty, had positive influences.Kim (2012) verified that quality desirability, which was the attitude of consumers toward price, had significantly positive influences on attitudinal and behavioral loyalty.Based on the literature, this study draws the following hypotheses on brand image, price, and brand loyalty.
Hypothesis 5: Brand image will significantly influence behavioral loyalty.
Hypothesis 6: Brand image will significantly influence attitudinal loyalty.
Hypothesis 7: Price will significantly influence behavioral loyalty.
Hypothesis 8: Price will significantly influence attitudinal loyalty.Ahn et al. (2011) confirmed that perceived service quality influenced attitudinal and behavioral loyalty differentially, and Keller (2001) claimed that perceived service quality significantly influenced behavioral loyalty.Park (2008) contended that reformed brand image strategies and efforts to maximize perceived service quality were needed to enhance consumer loyalty.Kim (2000) analyzed brand preference and brand loyalty by comparing the tendencies of an entire sample of consumers with the responses of a highly collective subset and a relatively non-collective subset, ultimately concluding that regardless of involvement, all groups were influenced by brand preference and brand loyalty.Keller (2001) argued that brand preference significantly influenced brand loyalty, and Park (2010) showed in her study on the influences of global brand preference on brand loyalty that brand preference significantly influence brand loyalty.Based on the literature, this study draws the following hypotheses on perceived service quality, brand preference, and brand loyalty.
Hypothesis 9: Perceived service quality will significantly influence behavioral loyalty.
Hypothesis 10: Perceived service quality will significantly influence attitudinal loyalty.
Hypothesis 11: Brand preference will significantly influence behavioral loyalty.
Hypothesis 12: Brand preference will significantly influence attitudinal loyalty.

Research Model
This study employs a conceptual model based on the literature review on corporate reputation, brand image, price, perceived service quality, brand preference, and brand loyalty in order to analyze the influences of corporate reputation on brand loyalty.This model is designed to determine whether the hypotheses can be verified with empirical relationships, as follows.

Measurements
To create an appropriate questionnaire, the related variables are deduced based on previous studies.It is then given to individuals that have experienced air travel.There are 23 survey items, four measuring corporate reputation, three measuring brand image, two measuring price, four measuring perceived service quality, four measuring brand preference, and three each for attitudinal and behavioral loyalty.The survey uses a five-point Likert scale, so participants put check marks on [very likely] -[Never] for each item.The items are listed in Table 1.

Measures
Variables a Corporate reputation The airline that I used keeps promises with customers well.The airline that I used manages its good image and good reputation.The airline that I used has a better reputation than those of other airlines.The airline that I used is praiseworthy.

Brand image
The airline that I used has a luxurious image.When I think of the airline that I used, it has a good image.The airline that I used has a good image as far as service is concerned.

Price
The price charged by the airline that I used was reasonable compared with the prices charged by other airlines.
The price charged by the airline that I used was satisfactory.

Perceived service quality
The quality of the airline that I used was good.The airline that I used provides good services (accurateness of work, immediacy, kindness, and professionalism of employees) in general.The airline that I used is superior compared with other airlines.The airline that I used has superior additional services (airline meals, mileage program, and lounge).Brand preference I have a good feeling toward the airline firm that I used.I like the brand of the airline that I used.I have good impression of the brand of the airline that I used.When I selected the airline, I thought about the brand.Attitudinal loyalty I would like to keep using this airline.I would like to recommend this airline to friends.I would choose this airline preferentially.

Behavioral loyalty
Even if the price were relatively expensive, I would use this airline.I had a pleasant feeling when using this airline.I think choosing that airline was a wise decision.

Attitudinal loyalty
The questionnaire survey is conducted from 17 th to 25 th , June, 2012 for 9 days on Korean individuals over 18 years of age who have flown on an airplane.To enhance the response rate of the survey, a researcher directly distributes the questionnaire to participants and collects it once completed.Of the 300 questionnaires distributed, 270 questionnaires are collected.20 of them are discarded due to accuracy problems.250 properly filled out questionnaires are secured for the analysis.The characteristics of the 250 questionnaires are indicated in Table 2.A confirmatory factor analysis is carried out to analyze the reliability and validity of the measured questions.As a result, the goodness of fit index is shown to be acceptable.(CMIN/DF = 2.574, p = .000;RMR = .044;RMSEA = .080;GFI = .843;AGFI = .795;IFI = .926;NFI = .885;CFI = .926).In addition, the SMC values for all variables appear to be over 0.4, suggesting that the variables of the measuring factors are explained.However, because the standardized regression coefficients of the first brand image item and first behavioral loyalty item are less than 0.7, the explanatory power is insufficient.The proximal value has sufficient explanatory power to serve as a measuring factor, so it is not removed.(Table 3).
In the analysis results of the structural equation model, the χ² value shows a significant difference.For the other fit indexes, the χ² value is as follows: GFI = .836,AGFI = .793,NFI = .877,RMR = .051.This suggests that the goodness of fit is relatively superior.The goodness of fit for the verification analysis of the structural equation model is shown in Table 4.The hypothesis verification shows that all but one of the 12 hypotheses is statistically significant.An airline's corporate reputation has a significant influence on brand image, price, perceived service quality, and brand preference.This suggests that as an airline's corporate reputation increases, its brand image increases, and the level of satisfaction regarding ticket prices and service quality increases.In addition, it can be concluded that as corporate reputation improves, preference for the airline brand also increases.Perceived service quality and brand preference have positive influences on behavioral and attitudinal loyalty.
This also indicates that loyalty toward an airline increases as passengers experience higher levels of satisfaction regarding prices and service quality.In addition, loyalty toward an airline increases when passengers have higher preference levels for that airline's brand.However, brand image does not have a statistically significant influence on behavioral loyalty.Thus, although brand image significantly influences attitudinal loyalty, an influential relationship with behavioral loyalty does not exist.The hypothesis verification results of the final study model are indicated in (Table 5).

Conclusions and Implications
This study analyzes the influential relationships between an airline's corporate reputation, brand image, price, perceived service quality, brand preference, and brand loyalty to investigate the processes and relationships by which an airline's corporate reputation leads to brand loyalty.The results of the empirical analysis can be summarized as follows.First, an airline's corporate reputation has a statistically significant influence on brand image, price, perceived service quality, and brand preference.In particular, it has the most influence on perceived service quality and brand preference.Second, among brand image, price, perceived service quality, and brand preference, brand preference has the most influence on behavioral and attitudinal loyalty.Thus, the reputation of an airline, which is connected to brand preference, can lead to brand loyalty.Third, although brand image can partially influence the attitudinal component of brand loyalty, it cannot influence behavioral loyalty.Thus, a good brand image can induce the potential for consumers to use an airline in the future, but that potential may not lead to the actual use of that airline.
The implications based on results of this study can be summarized as follows.First, an airline's corporate reputation should be managed as a critical factor.Airlines should find methods of maintaining a good reputation in in order that their corporate reputation can directly influence brand image, price, perceived service quality, and brand preference.Second, the effective management of brand image, price, perceived service quality, and brand preference is required to enhance brand loyalty in that loyalty increases as these factors increase.
Just as in other industries, airlines are affected when the differentiation factor between firms competing in the same industry is lost.Consumers may take cues from the social activities of airlines when making purchasing decisions.All else being equal, consumers will choose an airline that puts more effort into contributing to society.
Positive corporate reputation management leads to profit for the firm.As such, firms are obligated to work toward a healthier society through CSR activities, which in turn improves their reputations.Third, among the four variables used in this study, three of thembrand image, perceived service quality, and brand preferenceconform to a brand asset.This suggests that a brand should be fostered and managed while recognizing that it is a powerful and valuable asset to determine competitiveness and survival, and to capture consumer attention.
When firms possess a powerful brand, they have the means to possess a powerful, loyal customer base.In addition, although a brand is a product that the firm produces and sells, the consumers are actually purchasing tickets and related services.A powerful brand provides realistic, long-term business privileges by authorizing a powerful and discriminative superiority to a firm.
After consumers acquire loyalty to a particular brand, it is difficult to dislodge that loyalty.Good reputations are associated with having a good brand image, as well as with providing good quality and good prices.It also cultivates brand preference, and this will eventually lead to brand loyalty.This study shows that when an airline's corporate reputation is enhanced, brand loyalty increases.Corporate reputation wields a critical influence on brand loyalty.The effective management of corporate reputation can lead to brand loyalty, which can increase profit through the enhancement of corporate image.
This study has several limitations that suggest directions for future studies.First, the measurement of brand image in this study is advantageous because it is simple, but reality is probably more complex.It is difficult to develop a comprehensive understanding of why consumers like or dislike brands, and it is difficult to discern strong and weak factors in their decision-making processes.The second limitation is related to the sample.Age and occupation should be taken into account, but this was not possible in the present study due to time and environment restrictions Likewise, it would be useful to include non-Koreans in future studies.Third, the paper deals with the four years old research data.The world is changing so quickly therefore it will be interesting to realize similar research in the future to compare data and results.To overcome these limitations, follow-up studies on the relationship between corporate reputation and brand loyalty should be actively conducted.

Figure
Figure 1.Conceptual model

*
Note: a five-point Likert scale

Table 2 .
Sample characteristics

Table 3 .
Results of confirmatory factor analysis

Table 4 .
Analysis results of the structural equation model