The Influences of Customer Equity Drivers on Customer Equity and Loyalty in the Sports Shoe Industry: Comparing Korea and China

Abstract The concept of customer equity brings together customer value management, brand management, and relationship/retention management. However, the model put forth by Rust, Lemon, and Zeithaml (2000) does not include a consideration of the concept of loyalty, as in Vogel, Evanschitzky, and Ramaseshan (2008). In contrast to customer equity, customer loyalty involves an intention to engage in future purchase behavior with the same firm or brand. Its drivers are complex and dynamic, usually changing over time. Although plenty of researchers have studied those factors, the present study follows that of Johnson, Herrmann, and Huber (2006) and Vogel et al. (2008), which suggest that customer equity drivers can also drive customer loyalty. Thus, the present paper sets out to support this conclusion in the sports shoes industry, and to discover the differences in the influence customer equity drivers have on customer loyalty in Korea and China. This is because the product choices of consumers and their preferences for a particular product or brand are generally influenced by complex social factors (Yau, 1994). From 450 respondents in the countries’ capitals who answered the study questionnaire, the Korean sample included 125 university students and 75 fashion industry employees from Seoul, while the Chinese sample included 150 university students and 59 fashion industry employees from Beijing. To test the hypotheses, we first employed structural equation modeling with the maximum likelihood estimation method using the model without moderator. Then, for testing the differences between the two groups, a multi-group analysis with AMOS 7.0 was used to assess the moderating variable effects on the structural model (Byrne, 2001). Our research extends the literature on the outcomes of the three drivers of customer equity: value equity, relationship equity, and brand equity. The survey data of the study were used to examine their effects on customer loyalty, and the effect of customer loyalty on customer equity. The study’s focus on a specific industry, sports shoes, also extends the customer equity research into a different area. Our findings show that the customer equity model can be only partly supported. Relationship equity and brand equity can drive customer equity in the sports shoes industry. Results also show that value equity, relationship equity, and brand equity positively influence customers’ loyalty toward sports shoes brands, whereas customer loyalty has a positive effect on customer equity in that industry. Thus, value equity, relationship equity, and brand equity are not only the drivers of customer equity, but can drive customer loyalty as well. In the sports shoe industry, firms should keep investing in marketing activities targeted toward increasing the perceived equity of value, relationships, and brand. However, different nationalities can show different relationships among the customer equity drivers, customer loyalty and customer equity. Our study, though subject to several limitations, can provide several managerial implications for sports shoe firms. First, findings from testing customer equity in the sports shoe market show that value equity, relationship equity, and brand equity are the drivers of customer loyalty, suggesting that a sports shoes firm must meet customer expectations, create better relationships with customers, and increase the equity of the brands. Second, when managers make decisions about how to enter a new market, or how to improve customer loyalty, cultural and market differences should be considered.