Title: Loyalty, power and relationships: a latent class approach

Authors: Jouni Juntunen; Mari Juntunen; Mikko Paananen; Pekka Kess

Addresses: Department of Marketing, Oulu Business School, University of Oulu, P.O. Box 4600, FI-90014, Finland ' Department of Marketing, Oulu Business School, University of Oulu, P.O. Box 4600, FI-90014, Finland ' Department of Marketing, Oulu Business School, University of Oulu, P.O. Box 4600, FI-90014, Finland ' Department of Industrial Engineering and Management, University of Oulu, P.O. Box 4610, FI-90014, Finland

Abstract: The purpose of this research is to study how negotiating power and the quality of relationships influence loyalty intentions among latent customer classes. A tentative model was devised and tested using survey data from 173 respondents. The analysis was conducted with finite mixture structural equation modelling (FMSEM), which proved a powerful tool for revealing latent behavioural classes in the context of industrial management. Moreover, it is important to recognise that with the concepts used in this study at least, one homogeneous behavioural model is insufficient. The results indicate that it is essential for a seller of industrial products or services to understand that while customers may appear to be a homogeneous group, the customer base does comprise heterogeneous subgroups. Hence, it is important to identify customers correctly through their actual behaviour to deliver the opportunity to maximise profitability.

Keywords: relationships; power negotiation; loyalty intentions; latent customer classes; brewing industry; mixture analysis; finite mixture SEM; structural equation modelling; FMSEM; industrial management; customer behaviour.

DOI: 10.1504/IJMED.2014.069174

International Journal of Management and Enterprise Development, 2014 Vol.13 No.3/4, pp.219 - 230

Received: 23 Sep 2014
Accepted: 14 Feb 2015

Published online: 29 Apr 2015 *

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