The effect of purchaser’s price strategy on brand loyalty

Abstract

The aim of this research was to examine the nature of the relationship between price strategy and brand loyalty in case of a high involvement product (i.e. the car). A consumer may perceive the price of a product as an implication of its quality or as an implication of the value of a purchase in comparison with other goods of the same type. On the basis of the above assumptions, two price strategies were proposed: „price is not significant – the best product” and „price is significant – a cheaper product”. Two separate studies were carried out. The first sample consisted of 126 subjects, 55 males and 71 females aged 24-46. Brand loyalty behaviour was determined according to repeated measure of attitude toward brands in a specified period of time. Binary Logit Regression Analysis was applied and it revealed that the relationship between brand loyal behaviour towards a car make and price strategy is significant. The more important the strategy „price is not significant – the best product” is for the purchasers, the less likely brand loyal behaviour is to occur. The other sample consisted of 172 subjects, 79 males and 93 females aged 25-50. Brand loyalty was determined according to brand awareness measurement. Multinomial Logit Regression Analysis was applied and it revealed that the relationship between brand loyal behaviour and price strategy is significant. The more important price strategy is for purchasers, the less likely brand loyal behaviour is to occur. Both studies led to the conclusion that the purchaser’s price strategy „price is not significant – the best product” may decrease the likelihood of brand loyal behaviour towards a car make.