Enhancing Brand Loyalty through Brand Experience: Application of Online Flow Theory by Soo In Shim A dissertation submitted to the Graduate Faculty of Auburn University in partial fulfillment of the requirements for the Degree of Doctor of Philosophy Auburn, Alabama May 7, 2012 Keywords: brand, experience, loyalty, flow, online, shopping Copyright 2012 by Soo In Shim Approved by Sandra Forsythe, Co-chair, Wrangler Professor of Consumer Affairs Wi-Suk Kwon, Co-chair, Associate Professor of Consumer Affairs Hye Jeong Kim, Assistant Professor of Consumer Affairs Peng Zeng, Associate Professor of Mathematics & Statistics Gisela Buschle-Diller, Professor of Polymer and Fiber Engineering Abstract Companies strive to increase loyalty to their brand by providing their customers with positive brand-related experiences. However, no published work has investigated how consumers become absorbed in shopping a brand’s Website and how their optimal experience on that Website, called online flow, can influence their general brand experience and brand loyalty. The purpose of this study is to examine the relationships between consumers’ skill, perceived challenge of the task, online flow, brand experience, and brand loyalty. Data were collected using an online survey with a national sample of 500 female adults 20 to 34 years old. Respondents performed a given online browsing task on an existing brand’s Website randomly assigned to them and completed a questionnaire. The results from structural equation modeling analysis of the data show that the more skillful the consumers, the more likely they are to reach a state of online flow on a brand’s Website, providing support for flow theory. Results also showed that the relationship between skill and online flow was greater for consumers who felt more challenged by the given task, confirming the principle of flow theory that flow occurs when high skill is matched with high challenge. Further, online flow positively influenced brand experience, which in turn positively influenced brand loyalty. This study provides important theoretical, methodological, and managerial implications. Limitations and suggestions for future research are also discussed. ii Acknowledgments I would like to express my deepest gratitude to my co-advisors, Dr. Sandra Forsythe and Dr. Wi-Suk Kwon, for their excellent guidance, caring, patience, and for providing me with an excellent atmosphere for doing research throughout my graduate career at Auburn University. I would like to thank Dr. Hye Jeong Kim and Dr. Peng Zeng for guiding my research and helping me to develop my background in consumer affairs and statistics. I would also like to thank Dr. Gisela Buschle-diller who was willing to serve as an outside reader for me. Special thanks go to Dr. Carol Warfield, who let me pursue higher education in the department of Consumer Affairs at Auburn University and provided me with opportunities for financial support. I would like to thank my friend David Branscomb for always being willing to help and give his best suggestions. I would also like to thank Christin Seifert for helping me collect data. Many thanks to Qin Bian, Yi Sheng Goh, Jae Youn Chang, Shuying Long, Yishuang Li, and other colleagues, who used to use or are using graduate offices in Spidle Hall, for their encouragement and emotional support during my graduate studies. My thanks must go also to Dr. Yuri Lee, who gave me sage suggestions to help me overcome difficulties of studying abroad. Lastly, I am heartily thankful to my parents, elder brother, and younger sister. They were always supporting me and encouraging me with their best wishes. This dissertation is simply impossible without them. iii Table of Contents Abstract ........................................................................................................................................... ii Acknowledgments.......................................................................................................................... iii List of Tables ............................................................................................................................... viii List of Figures ................................................................................................................................. x Chapter 1 Introduction .................................................................................................................. 1 Purpose .............................................................................................................................. 5 Significance of the Study .................................................................................................. 5 Definition of Terms ........................................................................................................... 7 Chapter 2 Literature Reivew and Hypotheses .............................................................................. 9 Flow .................................................................................................................................... 9 Flow theory .................................................................................................................. 9 Online flow ................................................................................................................ 12 Skill and challenge: Determinants of online flow ...................................................... 18 Skill in online shopping ....................................................................................... 18 Challenge in online shopping .............................................................................. 20 Brand Experience ............................................................................................................ 21 Brand Loyalty ................................................................................................................. 23 Chapter 3 Pilot Test .................................................................................................................... 27 Instruments ........................................................................................................................ 27 iv Selection of brand Websites for online browsing task ............................................... 27 Browsing task scenario development ......................................................................... 29 Measurements ............................................................................................................ 30 Skill ....................................................................................................................... 33 Challenge ............................................................................................................... 34 Online flow ............................................................................................................ 35 Brand experience ................................................................................................. 36 Brand loyalty ....................................................................................................... 36 Sampling and Data Collection Procedure ......................................................................... 37 Data Analyses and Results ................................................................................................ 39 Data cleaning.............................................................................................................. 39 Sample characteristics ................................................................................................ 40 Validity of brand selection and browsing task ........................................................... 40 Measurement validity and reliability ......................................................................... 42 Skill ....................................................................................................................... 43 Challenge ............................................................................................................... 43 Online flow ............................................................................................................ 43 Brand experience ................................................................................................... 48 Brand loyalty ......................................................................................................... 49 Chapter 4 Main Survey ................................................................................................................. 51 Instruments ........................................................................................................................ 51 Brand Website selection and browsing task scenario ................................................ 51 Measurements ............................................................................................................ 52 v Sampling and Data Collection Procedure ......................................................................... 52 Data Analyses ................................................................................................................... 57 Results ............................................................................................................................... 60 Sample demographics ................................................................................................ 60 Measurement validity and reliability