Brand Positioning And Customer Loyalty In The Ghanaian Universal Banking Sector: The Moderating Effect Of Switching Cost

ABSTRACT

The liberalization of universal banking sector in Ghana, has intensified competition within the industry. To withstand this competition by banks and differentiate their services from competitors, has generated interest in understanding the brand positioning which seeks to design a firm’s offering and image or reputation to occupy a distinctive place in the mind of the target consumers to become loyal to the service provider. The introduction of switching cost as a moderator ensures that customers do not defect to a competitor because of keen competition but rather remain loyal to the current service provider for a longer period of time. The major objectives of this study was to assess the relationship between brand positioning dimensions and customer loyalty, and also to examine the effect of switching cost on the relationship between brand positioning dimensions and customer loyalty in the Ghanaian banking sector. Data was collected using questionnaires from 272 customers of universal banks within the Greater Accra Metropolis. The study found that price, trust, and core service as the brand positioning dimensions had a significant positive effect on customer loyalty. Core service was found to be the most important influence of customer loyalty, followed by trust and price in the sector. Similarly, the study revealed that some universal bank customers are loyal to their banks because of high switching costs and not because they are satisfied with the banks’ performance. The study recommends that if banks desire to achieve high customer loyalty, managers must endeavour to understand the special needs of their customers and design the core service to offer more value to customers. Banks’ managers should strive to establish a clear and strong corporate image focused on the bank’s integrity, credibility and benevolence to enhance trust. Banks should set fees or charges that are reasonable and affordable, and also increase the switching cost to minimize customers’ defection.