Branding And Customer Loyalty In The Ghanaian Banking Industry: The Mediating Role Of Brand Image

ABSTRACT Branding is a global phenomenon that has pervaded many industries. Researchers have confirmed that globally firms spend millions of dollars on branding activities. However, of the many studies that have been conducted on branding, there exists no study that directly examines the relationship between branding and loyalty. Furthermore, a common perception is that branding will automatically result in customer loyalty. This study sought to disprove that notion by stating that the presence of mediators such as brand image can ensure that branding leads to customer loyalty amongst customers of banks in Ghana. On this premise, the objectives of this study were to determine the direct relationship between bank branding and customer loyalty and to determine the mediating effect of brand image on branding and customer loyalty in the banking industry. A positivist research paradigm was adopted alongside a survey strategy. A quantitative and deductive approach was also adopted in this study. Questionnaires were utilized as the data collection instrument in this study. Items used in the questionnaire were developed from existing scales and literature. Data was conveniently gathered from 400 bank customers in Accra. Out of this, the process of data screening and cleaning yielded 322 usable questionnaires which were coded using the Statistical Package for Social Sciences (SPSS). The data was analysed using Structural Equation Modelling (SEM), where the two-stage approach was used in assessing the measurement model and structural model.The study conceptualized branding as brand elements, marketing programs and brand associations, according to Keller (2012). The results of the analysis indicated that brand elements on its own does not result in customer loyalty, neither does brand associations. The results however indicated that marketing programs was a significant predictor of customer loyalty. The analysis also revealed two mediation outcomes: a partial mediation where marketing programs predicted customer loyalty via brand image. A full mediation was also achieved between brand elements and customer loyalty via brand image. Thus bank branding does result in customer loyalty via brand image, implying that when banks direct their branding efforts towards the creation of a strong brand image, the outcome of customer loyalty can be achieved. It is recommended that banks direct all brand building activities towards the development of a strong brand image as that has been proven to be key to the development of customer loyalty amongst bank customers.