The branding literature assumes that the higher a brand’s equity, the greater is its behavioral loyalty. In this research, we develop a conceptual framework that explains the off-diagonal relationship between brand equity and behavioral loyalty (i.e., high equity but poor loyalty and vice versa) by identifying five shopper marketing related factors that potentially moderate this relationship. We adopt a multi-method approach by mailing surveys to collect shoppers’ attitudinal data on brand equity and the moderators for ten brands in two product categories, and then merging it with each household’s corresponding purchase data from a frequent shopper scanner panel to empirically test our framework. Findings reveal that approximately 40% of consumers exhibit high brand equity but low behavioral loyalty or vice versa. The relationship between brand equity and behavioral loyalty is accentuated by perceived instore presence and importance of brand choice decision, and attenuated by the brand equity of competitors. Our findings provide several implications for retailers and brand manufacturers.

Introduction

Brand managers strive very hard to create high equity for their brands hoping that it will result in high behavioral loyalty. This is because of the benefits of high behavioral loyalty, including reduced search for information (Moore & Lehmann, 1980), positive word-of-mouth (Westbrook, 1987), reduced cost of marketing (Aaker, 1991), and increased market share (Chaudhuri & Holbrook, 2001). However, the reality for many brands is that high brand equity does not always translate into the above benefits, making it a frustrating problem for managers because building brand equity is expensive and time consuming. Prior studies in the branding literature have examined the relationship between specific dimensions of brand equity (e.g., brand trust) and attitudinal or stated measures of behavioral loyalty and have found a strong positive relationship between them. Specifically, Chaudhuri and Holbrook (2001) examined the effect of brand trust and brand affect on attitudinal loyalty and purchase intentions across > 100 brands. Netemeyer et al. (2004) examined the effects of different consumer-based brand equity dimensions, specifically brand quality, value for money and brand differentiation, on the willingness to pay and subsequently on purchase intentions. Taylor, Celuch, and Goodwin (2004) examined the effect of brand equity on both attitudinal and behavioral loyalty in the context of industrial equipment. Recently, Romaniuk and Nenycz-Thiel (2013) examined the role of brand associations on behavioral loyalty. As highlighted in Table 1, in contrast to prior studies, we examine the role of brand equity on a revealed measure of behavioral loyalty and the factors that moderate the relationship. Consistent with prior literature that focuses on behavior-based brand loyalty (e.g., Ailawadi, Lehmann, & Neslin, 2003; Srinivasan, Park, & Chang, 2005), we define behavioral loyalty as consistency in revealed brand choice across several purchase occasions. This is different from attitudinal brand loyalty, which includes a degree of dispositional commitment in terms of some unique value associated with the brand (Aaker, 1991; Dick & Basu, 1994).1 While these prior studies conceptualize (true) brand loyalty to entail both behavioral and attitudinal loyalties, the focus in the current research is on understanding the influence of brand equity, which we believe is a richer substitute construct for attitudinal loyalty, on behavioral loyalty and factors that moderate this relationship. Moreover, we adopt Keller’s (1993) popular definition of brand equity as the differential effect of brand knowledge on consumer response to the marketing of that brand as compared to if the same product or service did not have that name.