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Resistance to Brand Switching When a Radically New Brand Is Introduced:

A Social Identity Theory Perspective

Presenter: Laura Chen10122617 Instructor: Dr. Teresa Hsu

Oct. 12, 2012

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CITATION

Lam, S. K., Ahearne, M., Hu, Y., & Schillewaert, N. (2010). Resistance to brand switching when a radically new brand is introduced: A social identity theory perspective. Journal of Marketing, 74, 126-146.

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PV = Perceived Value

CBI = Customer-Brand Identification

RPV = Relative Perceived Value

RCBI = Relative Customer –Brand Identification

SOME ABBREVIATIONS

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Introduction Literature Review Methodology Result Discussion Conclusion Reflection

CONTENT

Brand

loyalty

Perceived value

IntroductionSwitching or not?

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BACKGROUND

The business environment grows more complex and globalized, market disruptions become more prevalent.

Market disruptions can influence the relative standing of brands in the eyes of customers.

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PURPOSE OF STUDY

Build on social identity theory and the customer –company identification framework to formally propose the concept of customer-brand identification (CBI).

Combine social identity theory and the brand loyalty literature to purpose a conceptual framework of switching behavior.

Test the framework in the contest of a specific kind of market disruption, namely, the introduction of a radically new brand in a competitive market.

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CONCEPTUAL FRAMEWORK

Literature Review

Literature Review

• When Customer experience difficulty in generating positive information about their choice, they may infer that the amount of positive information is rather limited and may reverse their attitude toward the chosen brand.

( Wanke, Bohner, & Jukowitsch, 1997)

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Social Identity Theory

People define their self-concepts by their connections with social groups or organizations.

( Tajfel & Turner, 1979)

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Two Perspectives to Switching

Brand switching as functional utility maximization(McFadden, 1986)Brand switching as social mobility (Rao, Davis, & Ward, 2000)

Research Question

Will customers switch brands only to maximize functional utility?

Is there any customer-brand relationship that drives brand loyalty in the face of market

disruptions?

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Methodology

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Participants

• 708 cell phone users

Time

• 10 months during the launch of iphone

Place

• Spain

Focus• Switching behavior

Procedure

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Conduct the first wave

survey before the

actual launch

Other four waves was

carried out at 2 months intervals

Using discrete hazard

models to capture

switching behavior Final data set

including 679 usable responses

Results

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H1: The greater the RPV of the incumbent brand, the lower is the probability that a customer will switch to the new brand.

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H2: The greater the RCBI of the incumbent brand the lower the chance a customer will switch to the new brand.

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H3: The effect of RPV of the incumbent brand on resistance to switching to the new brand will not increase over time.

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H4: The effect of the RCBI of the incumbent brand on resistance to switching to the new brand will grow stronger over time.

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H5: The effect of the RCBI of the incumbent brand will be stronger than the effect of relative perceived value of the incumbent brand over time.

Discussion

Implication

Different predictors

Social identity

perspective

Switching drivers

Marketing strategy

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Companies can not be successfully disrupt the markets if their products only have attractive functional benefits but not win the identity war.

Conclusion

• The authors only focused on the disruptions of smart phone market. Other types of market disruptions can be explored in future studies.

• Because of cost concerns, this study could only tracked customers one year.

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Reflection

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THANK YOU!