I trust friends before I trust companies: The mediation of WOM and brand love on psychological contract fulfilment and repurchase intention

Abstract

Purpose

Consumer psychology research has established the importance of customer satisfaction as a determinant of customer repurchasing intention. Nonetheless, even satisfied customers switch brands. Also, even dissatisfied customers have repurchasing intentions. This means that customer repurchasing behaviour is extremely difficult to predict, necessitating additional research to identify additional factors that can help organizations better understand the methods to predict customer repurchasing intention. To fill this knowledge gap, this study examined the mediating effects of brand love (BL) and positive word of mouth (PWOM) on psychological contract fulfilment (PCF) and customer repurchasing intentions.

Design/methodology/approach

This is a cross-sectional study. The study used structural equation modelling (SEM) to analyse relationships from a sample size of 400 beauty salon customers. Also, a process macro mediation test was used to analyse the mediating effects of BL and PWOM on the relationship between PCF and customer repurchase intentions.

Findings

The findings indicate that transactional and relational psychological contracts have a positive and significant relationship with BL and PWOM. As well, BL and PWOM positively and significantly influence customer repurchase intentions. Finally, the findings indicate that BL and PWOM mediate the relationship between psychological contract fulfilment and customer repurchase intentions.

Research limitations/implications

This survey sampled beauty salons solely. Given that each type of organization may have a unique way of fulfilling psychological contracts, future studies may include more categories such as restaurants and craftsmanship to broaden the sample. Additionally, this study utilized female beauty salons. Therefore, future research could include salons that cater to women and men to boost the sample's generalizability. Finally, this study concluded that BL and positive recommendations are the most effective variables for resolving consumer satisfaction challenges. However, additional factors can probably amplify this fact by focusing on additional elements to broaden the arguments.

Originality/value

Past studies have extensively covered customer repurchasing intention in relation to customer satisfaction. However, it was noted that even some satisfied customers could switch to other brands, and those who were dissatisfied could repurchase the brand. Given that little is known about how other factors than customer satisfaction can affect repurchasing intentions, this study examines the mediating effects of BL and PWOM on PCF and customer repurchase intentions.

Citation

Ismail, I.J. (2022), "I trust friends before I trust companies: The mediation of WOM and brand love on psychological contract fulfilment and repurchase intention", Management Matters, Vol. 19 No. 2, pp. 167-186. https://doi.org/10.1108/MANM-02-2022-0033

Introduction

Customer repurchase intention is designed to encompass or explain an individual's personal preference for purchasing a particular product again. Repurchase intent is a highly effective strategy for raising profit margins and assuring a company's long-term success (Wangwiboolkij, 2011). Customers' repeat purchase is a sign of customer loyalty (Chiu et al., 2009). As a result of the severe rivalry that exists today, businesses must compete to acquire new consumers and retain existing ones to survive and thrive (Ismail, 2022a, b). Business owners are now considering customer switching behaviour as a complex phenomenon. Hence, dealing with this behaviour requires them to determine what makes them reconsider repurchasing the foregone products. Switching hurdles and inducements can exist in customers' perceptions simultaneously, and the absence of one may result in a biased estimation of customer behaviour, leading to erroneous conclusions and ineffective management actions (Chuah et al., 2017).

On the other hand, owners of businesses and researchers believe that increased customer satisfaction has a favourable impact on the number of customers that the company retains. However, the scholarly concern is that customer satisfaction reflects short-term emotions associated with fulfilling consumers' needs. This means that having only satisfied customers might not be enough to maintain achievement in the competitive industry of today despite the fact that customer satisfaction serves as the foundation for other customer behaviours like repeat purchases (Carroll and Ahuvia, 2006; Hsu and Chen, 2018).

In addition, Kumar et al. (2013) demonstrate that placing an exclusive emphasis on the contentment of customers is insufficient to guarantee the maintenance of customer-organization relationships that are profitable over the long term. In this situation, customer satisfaction is viewed as a short-term emotion associated with fulfilling customers' requirements and hence may fall short of adequately explaining how to achieve long-term effects, such as client retention (Ghazali et al., 2016). This is stressed by evidence from the very recent literature about consumer psychology that some of the customers have switched to other products or have shown an intention to switch regardless of being highly satisfied customers (Evanschitzky et al., 2022). At this point, organizations must come up with several strategies that go beyond customer satisfaction. Among the hailed initiative that has been considered, the supreme step toward future customer behaviour is brand love (BL). A satisfied customer's level of passionate, emotional attachment to a particular product is defined as BL. Although BL and customer satisfaction look similar, these concepts have different constructs (Carroll and Ahuvia, 2006).

BL is distinct from customer satisfaction in the fact that, whereas customer satisfaction is typically conceived as a cognitive judgement requiring thoughts, BL is considerably more emotive in nature. This indicates that if a customer has cognitive responses to a product, they can alter them at any time and have a desire to switch to another product if they are dissatisfied with the product at the time. BL is more concerned with the emotional connection between the buyer and the product. These emotional attachments are tough to shake off due to the marketing pressure exerted by competitors. Second, although customer satisfaction is often considered the consequence of an exchange between the customer and the company, BL is frequently the product of a consumer's long-term engagement with the brand (Carroll and Ahuvia, 2006). Besides, customer satisfaction is typically related to the expectancy disconfirmation paradigm, whereas BL is defined by the consumer's knowledge of the brand's expectations.

Finally, BL entails a readiness to declare affection (Carroll and Ahuvia, 2006). Therefore, creating BL could be the next important step for increasing customer repurchasing intentions. Similarly, since even satisfied customers can switch, creating recovery strategies can be a step forward for creating customer repurchase intentions (Tarofder et al., 2016). Further, if a customer is displeased with a service or product, they may be equally dissatisfied with an unsuccessful recovery, or vice versa, depending on the circumstances (Ismail, 2022c). The company's efforts to recover from the failure take on a variety of forms, but they all have the same goal in mind: to ensure that recovery methods affect BL, which in turn raises the likelihood of customers intending to repurchase the company's products. This eventually yields BL and positive word-of-mouth (PWOM) (Kau and Loh, 2006; Tarofder et al., 2016).

According to Tarofder et al. (2016) and Zhu et al. (2004), organizations with a failed recovery strategy may experience increased negative word of mouth (NWOM), and a customer who has faced a bad experience from NWOM may tell 10–20 individuals, resulting in a loss of approximately 30% in sales. Apart from a noted connection between BL and the intention to repurchase, PWON has a true connection with repurchasing behaviour among customers. Customers typically view PWOM as a way to mitigate a variety of risks associated with repurchasing decisions, including social, psychological and financial risks. Consequently, customers seeking recommendations believe that positive recommendations aid in purchase decisions and refrain from purchasing if they receive negative recommendations (Amani, 2022a; Ismail, 2022d).

Indeed, evidence indicates that negative information influences consumer ratings more than positive information (Sweeney et al., 2005). Thus, negative information has a bigger impact on beliefs and must be neutralized through appropriate techniques such as recovery strategies to sway the minds of dissatisfied customers and those who intend to switch to other products. So far, it is clear that BL and PWOM are important factors for achieving customer intention to repurchase. But one of the lingering questions is how these two concepts can be achieved to influence customer repurchase intention. Since most of the strategies, either straightforward or recovery, aim to maintain or change the customers' minds, these strategies act as a promise to the customers. Hence, they act as psychological contracts between customers and organizations. Purchasing psychological contract ideas originated in human resources management; thus, psychological contracts in organizations can consist of customers' beliefs about the marketing strategies defined in terms of the agreement between customers and organizations.

Psychological contracts are made up of the responsibilities that customers think businesses owe them and the responsibilities that customers think they owe businesses in return. This is backed by the fact that customers' intention to repurchase is contingent upon the value acquired from prior transactions, defining the promised future transactions. They typically base future purchase intentions on the value gained from earlier contacts, with relationship benefits serving as a surrogate for future advantage expectations. Repurchase intention is typically determined by surveys of current consumers, which examine their proclivity to buy the same brand, product/service and from the same company (Fungai, 2017).

In this way, there are two outcomes of a psychological contract: breaching the promises and fulfilling the promises. The psychological contracts are said to be breached if the customers perceive that organizations have failed to fulfil one or more of the psychological contract obligations, meaning that customers perceive that they have been treated wrongly concerning the terms of agreements with organizations (Pavlou and Gefen, 2005). Furthermore, previous research revealed that customers could be punished with vengeful intentions after experiencing service failure or unfair treatment (Funches et al., 2009; Grégoire and Fisher, 2006). Although each consumer's perception of service failures differs, they may perceive differently and express feelings of dissatisfaction through complaining to service providers or even showing response behaviours such as informing friends and relatives about their experience of service failures (Hai-Ming et al., 2020). Therefore, this highlights the need for designing and providing proper recovery strategies that can act as promises to the customers (Tarofder et al., 2016).

On the other hand, the psychological contract fulfilment (PCF) will mean that the promises have been met. This means there is a link between psychological contract breach and customer dissatisfaction and between PCF and customer satisfaction. Thus, as long as customers perceive that organization have adequately met their obligations, such as providing promised prices, quality products, proper services, etc., they will more likely feel inclined to take actions in favour of the organization by spreading PWOM to other customers, hence increasing the possibilities of repurchasing for those customers who switched to other products. Most importantly, it is vital to consider the influence of psychological contracts on BL creation and PWOM because some negative incidents between customers and organizations may influence the customers' overall perception of the products, which in turn affects BL and makes NWOM spread so quickly.

To emphasize customers' repurchase intention, it is imperative to build a more comprehensive understanding of customer–organization relationships by examining how PCF results in BL, PWOM and customer repurchasing intention. Aside from that, given its role in compelling organizations to provide promised services and strengthening customer-organization relationships, one would expect psychological contracts to receive special attention from marketing scholars and practitioners. However, very little is known about how this concept can be used in customer psychology studies. In addition, the challenges relating to customer satisfaction, particularly concerning customer intention to repurchase, as presented earlier, have not been well cultivated in the literature.

Since most of the available studies are based on the repurchasing intention as a result of customer satisfaction, which has been found not to be more effective in the current modern business environments, this study has several rationales to add to the body of literature. First, it looks at how PCF can result in PWOM and BL among customers, which have been documented to be a higher level of customer psychological state of mind than customer satisfaction. Second, introducing PWOM and BL as critical mediators of the relationship between PCF and customer repurchasing intention provides a unique and new theoretical and empirical understanding of how business organizations can reduce customer switching intentions through increasing customer repurchasing intentions. This is important because, in most cases, the perceptions of the customer on the fulfilment of the psychological contracts by the business organization increase the chances of developing BL toward the product (i.e. I love this brand) as well as increasing positive recommendations due to the trust they have from their close friends (i.e. I trust friends before I trust companies). Given to the presented gap in the literature, the researcher is motivated by the fact that some customers' repurchasing intentions can be attributed to a combination of several factors, among which PCF, BL and PWOM can provide new insight in the literature than considering only customer satisfaction. The general research question is as follows: what are the effects PCF has on customer repurchasing intention when mediated by BL and PWOM?

Theoretical review

The social exchange theory governs the course of this study. This theory is characterized by voluntary actions among individuals driven by the returns they expect from others, which in most cases bring such returns to others. The theory emphasizes the importance of social and economic exchanges based on the obligations involved in the exchanges. Throughout the exchange process, the theory strongly emphasizes the general expectation of some future benefit (Blau, 1964). In marketing, the interactions between customers and organizations involve material transactions, which are typically accompanied by monetary episodes in ongoing social relationships. Products, resources, transactions and profits are all subject to the laws of supply and demand, which are explained in the exchange (Emerson, 1976). A study by Lambe et al. (2001) highlights that exchange interaction involves social and economic outcomes that determine the exchange relationship's dependence. If partners have good social and economic outcomes over time, it can make them more committed and keep the exchange relationship going. According to Amani (2022b), the exchange approach views social interactions as a series of social or economic exchanges. Therefore, social exchanges are “voluntary activities” that may be triggered by a company's treatment of its consumers, with the expectation that the consumers will be required to repay the marketing company's good deeds. In this case, customers will increase their BL and PWOM among prospective customers. For the most part, the exchange perspective views the customer–organization relationship as a series of social or economic exchanges between the two parties involved in the process of marketing. When customers and marketing companies enter into economic exchange relationships, both parties will be committed to exchanging economic benefits. Therefore, the study proposes that customers attach themselves in exchange for specific marketing strategies, such as price reductions and other promotional rewards that the organizations offer. Based on this point of view, customers' impressions of a beneficial transaction are likely to increase commitment on the part of organizations in terms of delivering the products promised. However, this is possible if organizations fulfil the promises “signed” in the psychological contracts. In that case, customers will feel that they have been attended to, which will increase BL and PWOM, hence increasing customer repurchasing intention.

Literature review and hypothesis development

Psychological contracts fulfilment and brand love

Typically, when promises are kept, individuals are satisfied and develop feelings of affection. Literature suggests that addressing customer needs and actively engaging with their emotions generates brand loyalty. Consequently, it is generally acknowledged that there is a positive relationship between PCF and BL among customers. According to Liu et al. (2020a, b), psychological contracts encapsulate customers' organized knowledge of the resource exchange patterns between customers and organizations in a relationship. Customers establish expectations about a brand during the relationship-building process. Customer satisfaction indicates that psychological contracts have been met (expectations are fulfilled), and subsequently, they will develop a greater sense of brand trust and gratitude for the organization, resulting in a rise in emotional attachments for the brand.

As noted by Hai-Ming et al. (2020), the psychological contract is made up of transactional and relational psychological contracts. Hence, in transactional psychological contract (TPC) fulfilment, it is expected that organizations understand how economic exchange makes customers increase their BL. The tangible inducements based on self-interest, such as price cuts and other promotional activities, might increase BL among customers. In most cases, TPCs are easily observed and monitored and thus require only a minimal amount of contracting party involvement.

Furthermore, relational psychological contracts (RPCs) are typically dynamic, subjective, relationship-oriented and based on mutual trust to be successful. In most cases, customers wish the organization to be stable and create a reliable marketing environment. In this approach, the fulfilment of a relational psychological contract leads to consumer satisfaction, trust and commitment by establishing a shared psychological contract (Yekaterina, 2015). A customer's affection for a brand might grow even more when they have a psychological contract fulfilled with the service provider with whom they do business. Again, if customers feel that organizations have fulfilled their obligations, they will feel satisfied and reduce complaints against organizations. Therefore, they will increase commitment and trust, thus increasing the possibility of creating BL. Based on the analysed importance of psychological contracts, the study hypothesized that

H1.

TPCs significantly influence BL.

H2.

RPCs significantly influence BL.

Psychological contracts fulfilment and positive word of mouth

The foundation of marketing success is a mutually beneficial relationship between businesses and customers. Psychological contracts, which are typically based on social contracts, are based on unwritten, informal agreements founded on trust, good faith and goodwill. Because psychological contracts are based on trust, once they are broken, the person who did it cannot be sued. As a result, customers always retaliate by spreading NWOM by saying bad things about brands in front of potential customers and switching to competitors' brands (Lin et al., 2015). On the other hand, PWOM is based on good recommendations about an organization due to psychological contracts being fulfilled. This indicates that it is the act of informing other customers about a customer's positive experience with a certain marketing company, their services or products (Mehmood et al., 2018).

Generally, the limited available empirical evidence shows a positive relationship between PCF and the PWOM. For example, a study by Yekaterina (2015) indicates that when customers perceive that the service provider has kept a promise by providing them with great service and preferential treatment after they pay for the offered services, they invariably promote PWOM. This is mostly due to fulfilling the relational psychological contract, under which satisfied customers begin referring new customers or spreading PWOM. The connection between the customers and the providers of services will then develop into one of long-term trust and future promises. This is supported by Theotokis et al. (2012), who also noted a correlation between parties' feelings in reciprocal interaction, such as organizations and customers, and behavioural responses, such as PWOM. This demonstrates that if psychological contracts are not positively fulfilled, negative behavioural responses, including the intention to switch, will result from psychological contract violations (Lin et al., 2015).

Apart from that, good social relationships among customers and organizations, which is a crucial component of psychological contracts, may result in emotional intelligence that can further influence word of mouth (WOM) complaints, and purchase intention (Boxer and Rekett, 2011). Therefore, organizations should monitor consumers' WOM because both relational and transactional contract violations directly impact customer recommendations. Furthermore, consumers' willingness to promote products and services may not decline if organizations can handle contract violations as quickly as possible. In other words, to preserve a durable consumer–brand relationship, organizations should pay attention to the early stages of a contract breach, provide convenient interaction channels and monitor customers' WOM activity (Liu et al., 2020a, b).

H3.

TPCs significantly influence PWOM.

H4.

RPCs significantly influence PWOM.

Brand love and customer repurchasing intentions

Repurchase intent has traditionally been used as a lone indicator of customer satisfaction and product performance. Customer repurchasing intent refers to the propensity of customers to purchase products from the same companies. Customers prefer to repurchase products from the same companies for a variety of reasons. Customers believe that the organization has improved its standards for a variety of reasons, including their prior purchase experience with the products and its recovery strategies. Customers form strong repurchase intentions if they perceive value and are pleased with their previous purchases from the same organizations (Ali and Bhasin, 2019). However, regardless of the reasons one could mention, BL is said to be the most important attribute of repurchasing intention. BL presents the emotion that customers hold in respect to brands. The bond between the customer and the product makes customers intend to repurchase the product Rubin (1973) describes love as a person's attitude toward another person, which includes predispositions to feel, think and behave in certain ways toward that person.

Regarding this concept, BL can be defined as a satisfied customer's deep emotional attachment to a particular brand name (Carroll and Ahuvia, 2006). Empirical studies have shown a positive association between BL constructs and various marketing variables (Carroll and Ahuvia, 2006). A study by Huber et al. (2015) has shown that BL gives strong rational connections in emotionally driven constructs and rational attributes, such as the partner's physiology, age and other demographic characteristics. All these constructs are related to the intention to repurchase products. This is supported by Garg et al. (2015), who noted that different cognitive elaborations of quality information and brand engagement of BL are more relevant for repurchase intention among customers. Therefore, it can be hypothesized that

H5.

BL significantly influences repurchase intention.

PWOM and customer repurchasing intentions

Occasionally, communications sent by businesses through advertisements cannot always be trusted. In English, there is a proverb that “good things sell themselves; bad things advertise.” Thus, while this is not always the case, there is a belief that some businesses advertise because their products lack the necessary traits to sell themselves. Based on this, most customers will rely on messages from relatives and friends whom they trust more than messages from business organizations (I trust people I know before I trust companies). When a consumer's interest in a product or service is reflected in their everyday contacts, this is referred to as “WOM.” In essence, it is free advertising generated by consumer experiences and by something that surpasses their expectations more often than not. It is the interchange of marketing information in which customers play a significant part in influencing specific actions by altering their views or attitudes toward the services or products (Amani, 2022a).

This study establishes the theoretical position that if positive WOM is spread from one consumer to another, there is a possibility that positive WOM signals will generate positive responses for repurchasing among customers. The premise is that most customers believe and trust the comments of their friends more than those of businesses. In general, WOM has a substantial impact on customer behaviour and attitudes and the formation of loyalty. WOM behaviour is believed to originate in this fashion due to satisfaction or dissatisfaction with consumption. The majority of previous research has identified the positive effect of WOM as the most influential element affecting corporate performance (Amani, 2022a; Curtis et al., 2011; Dinh and Mai, 2016; Duan et al., 2008; Moslehpour et al., 2018), suggesting that WOM can help to facilitate repurchase intent among customers. According to Kitapci et al. (2014), if a customer recommends a service or product to others, this is considered PWOM. However, if a customer complains to others about a service or product, this is considered an NWOM. Thus, PWOM recommendations from a satisfied customer result in repurchasing behaviour. Additionally, customers who believe that the services meet or surpass their expectations due to WOM will disseminate the pleasant experience and impression and suggest the services to other prospective customers. These favourable experiences and impressions benefit other potential consumers and customers' future repurchase intentions (Leonnard et al., 2017; Liu and Lee, 2016; Serra Cantallops and Salvi, 2014).

According to statistics, WOM communication is nine times more effective than print and media communication at rapidly disseminating information (Chang et al., 2013). This means that the more PWOM spreads, the more social commerce platforms can share their experiences, opinions and information with potential customers (Meilatinova, 2021). Also, Kageyama and Barreda (2018) suggest that PWOM can encourage customers to become loyal and behave favourably toward the brand through repeated purchases, brand revisits and higher prices. In summary, the facts presented above bolster the assumption that customers who distribute favourable remarks and evaluations about a brand are more likely to repeat purchases. Based on this, it is possible to hypothesize that

H6.

PWOM significantly influences repurchase intention.

The mediation effect of BL and PWOM on customer repurchasing intentions

The revised literature has suggested that there is a link between PCF and customer psychological outcomes, such as BL and PWOM. Also, BL and PWOM influence repurchase intention. Generally, the fundamental reason for proposing that BL and PWOM influence the association between PCF and customer intention to repurchase is that previous literature suggests that BL emphasizes emotions among customers and brands. BL results from a high-intensity engagement between organizations and customers (Fournier and Alvarez, 2012). It reflects a customer's level of emotional attachment to a certain brand. Thus, if promises are kept, there is a probability that BL will develop among customers, resulting in repurchasing habits. This is because customers generate various pleasant emotions associated with the brand during the BL creation process. These emotions are critical in determining repurchase intentions.

Similarly, PWOM communications are critical in mediating the relationship between PCF and repurchasing intention. It follows that when an organization fulfils psychological contracts, customers tend to share information with other consumers that highlights a product's or service's merits and encourages other consumers to adopt the product or service. This will increase the customer's intent to purchase other products. Customer delight must typically be expressed in good messages and reviews before positively influencing customers to repeat their purchasing patterns (Kageyama and Barreda, 2018). The primary issue is that not all satisfied consumers express a strong desire to repurchase from the business. As a result, both BL and PWOM are likely to play a critical role in mediating the interaction between psychological contracts and the customer's intention to repurchase. Therefore, it is reasonable to hypothesize that

H7.

BL significantly mediates the relationship between psychological contracts fulfilment and repurchase intention.

H8.

PWOM significantly mediates the relationship between psychological contracts fulfilment and repurchase intention.

Theoretical model

This theoretical model is meant to explain the relationships underlying this study. The main idea is that fulfilling psychological contracts, such as transactional contracts and relational contracts, is a necessary step for BL and good word-of-mouth. Moreover, BL and PWOM are regarded as significant predictors of customer repurchase intent. Because of this, BL and PWOM may play a key role in connecting PCF and customer plans to buy again (see Figure 1).

Methodology

Study area, design, sample size and sampling procedures

This study used a cross-sectional survey research approach. The Dodoma region of Tanzania was a suitable area for this study. This is because Dodoma is the capital city, having just been relocated from Dar-es-Salaam. Although the problem of customer repurchases intentions cuts across all businesses, the study was interested in looking at beauty salons. This is because, since the relocation of the capital city to Dodoma, the number of women's beauty salons has increased as has the number of customers. The growing demand for women's beauty salon services has created an opportunity for beauty assistants and other new business personnel to open their own beauty salons. At the moment, there is a mushrooming interest in mastering beauty salon management abilities. As a result, data collection for the study was easy to manage. Further, women's beauty salons were chosen for this study because they are rapidly growing businesses in a highly competitive market. Each beauty salon strives to maintain a satisfied customer base and hopes to return multiple times through repurchase intentions.

Due to the diverse nature of customers of beauty salons, the specific population is unknown. Therefore, 500 customers of beauty solon were initially invited to complete a structured questionnaire. However, only 400 questionnaires were returned, resulting in an 80% response rate. In addition, the study employed a convenience sampling in which face-to-face contact with customers of beauty salons was used first, followed by the drop-off and pick-up (DOPU) technique. The DOPU technique was appropriate because the beauty salons were used as the DOPU centres. A study by Steele et al. (2001) found that the DOPU technique has the potential to increase survey response and can improve researchers' ability to determine eligibility compared to mail-based data collection techniques. This method also assisted in reducing potential non-response bias (Allred and Ross-Davis, 2011). Finally, the researcher carried out a formal test for early and late responses despite the fact that the high response rate gives the impression that the researcher is confident that non-response is not an issue (Armstrong and Overton, 1977). As suggested by Weiss and Heide (1993), non-response bias can be examined by comparing early and late responses. Thus, the early responses were defined as the initial 75% of the first returned questionnaires, and the late responses were defined as the final 25% of the late returned questionnaires. The comparison between early and late responses was conducted using a t-test that included all variables. The results showed that there were no significant differences between early and late responses (p > 0.05). Therefore, in this study, non-response bias was not an issue.

Measurement items and data analysis

The items used in this study were adopted from a careful review of the extant literature to identify relevant items to fit with the context of a beauty salon. A slight modification of items was done to fit the beauty salon, methodologies and Tanzania's context during the process. The survey was divided into four sections: the first section was based on the items related to psychological contract fulfilment; of which, this construct was further divided into two parts, i.e. TPC and RPC. Three items (tpc1–tpc3) for TPCs were adopted and modified from Liu et al. (2020a, b), whereas three items (rpc1–rpc3) defining RPCs were adopted and modified from Liu et al. (2020a, b). The second section involved BL. Seven items (bl1–bl7) were adopted and modified from Albert et al. (2008) and Junaid et al., (2019). The third section consisted of PWOM; of which, the five items (pwom1–pwom5) were adopted and modified from (Laroche et al., 2005; Talwar et al., 2021).

Finally, five items (cpi1–cpi5) of customer purchasing intention (CPI) were adopted and modified (Leonnard et al., 2017). A complete list of items is presented in Table 1. The items were measured using a five-point Likert scale, ranging between 1 = “strongly disagree” and 5 = “strongly disagree”. The data analysis was done using structural equation modelling (SEM). Confirmatory factor analysis (CFA) was used to confirm a measurement model, and path analysis was used to test for causal relationships between independent and dependent variables. A process macro test was conducted to test the mediation effects.

Common method bias

The study also included statistical controls to assess the prevalence of common method bias. Harman's single factor test is a frequently used technique (Podsakoff et al., 2003). According to Harman's single factor score, which demands that all items be loaded into a single common factor with a total variance of less than 50%, the findings suggest that all single factors were less than 50% (41.56%). This validates that the data are free of the most frequent types of common method bias. To follow the recommendation by Podsakoff et al. (2003) that the common bias problem can also be managed during data collection, the study did not inform sampled customers of the study's aim but assured them that their responses would remain anonymous and confidential.

Results

Social-economic characteristics of respondents

Most of the customers of beauty salons have an average age of 39–59, 246 (61.5%). This is followed by 18–38, 132 (33%). This indicates that sampled customers have enough experience to respond to the questions related to psychological contract fulfilment, BL, PWOM and intention to repurchase. This is also supported by the level of education; of which, the majority have a college level of education with 342 (85.5%). This level of education justifies that sampled customers have enough education to provide reasonable answers to the items in the structured questionnaire. Finally, most respondents are employed in private firms, with 243 (60.8%) (Table 1).

Measurement model assessment

Before performing a path analysis to test structural relationships, a CFA was conducted. The results indicate that all factor loadings ranged between 0.681 and 0.921 (factor loaded >0.6); hence, it can be concluded that all items were acceptable for path analysis. Apart from that, the reliability test of all items was tested using coefficients of Cronbach alpha and construct reliability. The results also suggested that all constructs had values > 0.7. The recommended value should be > 0.70 (Nunnally and Bernstein, 1994). Additionally, Root Mean Square Error of Approximation (RMSEA) was found to be 0.054 (0.05 ≤ RMSEA ≤0.08), the measurement model fit was x²/df = 1.298 (1 ≤ x²/df ≤ 3), AGFI = 0.957 (Close to 1), CFI = 0.961 (Close to 1), IFI = 0.954 (Close to 1) and TLI = 0.949 (Close to 1). These values indicate that measurement fitness is very good (Hair et al., 2006).

Apart from that, the AVE obtained ranged between 0.607 and 0.704, greater than 0.50 (Table 2). This means convergent validity of all items was achieved (Fornell and Larcker, 1981). Also, Maximum Shared Variance (MSV) was found to be less than AVE, and the squared correlation values among constructs were less than AVE, indicating that the measurement model met the criterion for discriminant validity (Fornell and Larcker, 1981). Based on these results, it can be concluded that all latent items involved in the analysis of beauty solon had convergent and discriminant validity (Table 3). Apart from that, Table 3 reveals that the mean scores of the items included in the confirmatory factor analysis range from 0.356 to 0.452. This suggests that nearly all of the items are essential for explaining the particular constructs. In addition, the findings indicate that the standard deviation (SD) ranges between 0.043 and 0.121.

Hypothesis testing

As depicted by Table 4, the path coefficients for the direct relationships indicate that there are positive and significant relationships in all relationships involved in the path analysis. Specifically, TPCs and BL have (ß = 0.317, t > 1.96, p = 0.013) and RPCs (RPC) and BL has (ß = 0.199, t > 1.96, p < 0.001), thus supporting H1 and H2. The coefficient of multiple determinations (R²) for BL is 0.51. This means, TPCs and RPCs explain the proportion of variance in BL as a dependent variable by 51%. This also indicates that the proportion that remains (1 − R²) = 49% is the variance that is not predicted by TPC and RPC dimensions. The remaining 49% could be explained by perceived personalization, consumer brand engagement, consumer brand connection and brand self-expressiveness (Tran et al., 2021).

Also, TPCs and PWOM have (ß = 0.294, t > 1.96, p = 0.003) and RPC and PWOM have (ß = 0.425, t > 1.96, p < 0.001), therefore supporting H3 and H4. The coefficient of multiple determinations (R²) for PWOM is 0.6. This means, TPC and RPC explain the proportion of variance in PWOM as a dependent variable by 60%. It further shows that the remaining 40% is the variance that could explain variability of PWOM if other variables were included in the model. This 40% could be explained by other variables such as trust and satisfaction (Meilatinova, 2021).

Apart from that, BL and CPI have (ß = 0.254, t > 1.96, p = 0.029) and PWOM and CPI have (ß = 0.446, t > 1.96, p < 0.001), hence supporting H5 and H6. The coefficient of multiple determinations (R²) for CPI is 0.56. This means, BL and PWOM explain the proportion of variance in CPI as a dependent variable by 56%. This means that, there is 44% of the variance that was not projected by the model. This 44% could be explained by other variables such as trust and satisfaction (Meilatinova, 2021), perceived value and attitude (Asti et al., 2021).

Testing of mediation effect

The study tested the mediation effect of BL and PWOM using the process macro test as proposed by Preacher and Hayes (2004). This is aimed at testing the hypotheses H7 and H8. However, before conducting a test, the items define transactional and RPCs (tpc1–tpc3 + rpc1–rpc3) from PCF. As shown in Table 5, the bootstrap upper (BootULCI) and lower limit (BootLLCI) CI are 0.1336 and 0.2791, respectively, implying that the 95% CI contains no zeros. This means H7 was supported. Additionally, as shown in Table 6, the BootULCI and BootLLCI are 0.1644 and 0.3771, respectively, suggesting no negative values within the 95% CI. This means H8 was supported.

Discussion

Consumer psychology research has demonstrated the significance of customer satisfaction as a primary determinant of customer intention to repurchase. Nevertheless, as stated previously, even satisfied customers frequently switch brands. Therefore, there is a need to look into other relationships that can help to develop a long-lasting emotional relationship between organizations and their customers. This study contributes to the understanding of the role of BL and PWOM as mediators of the relationship between PCF and customer repurchase intentions. In general, the study hypothesized that customers who have developed BL and PWOM as a result of the fulfilment of psychological contracts tend to repurchase products and services on purpose. In these exchange relationships, the fulfilment of relational and TPCs may be a determining factor. Some beauty salons, for instance, employ fair, impartial and considerate strategies to assist their clients in enhancing their relationship with them.

In addition, they employ transactional strategies, such as offering competitive pricing relative to other beauty salons and attempting to link prices to the quality of service rendered. Aside from that, they maintain low prices to meet the needs and expectations of their customers. Thus, the customers of beauty salons whose psychological contracts have been fulfilled have developed a strong attachment to their preferred brands, preventing them from engaging in switching behaviour. As a result, they will typically prefer to re-purchase the services.

As well, most customers who develop BL tend to remain loyal to the brand and are constantly thinking about defending their beloved brand. To them, switching to another brand would constitute a betrayal of their beloved brands. These findings match Javed et al. (2015), who noted that customers who have developed a brand attachment to a particular product or organization would undoubtedly defend it through extra-role behaviours such as brand defense. In most cases, these customers do not switch, and if they do, it is a temporary act before they intend to repurchase a beloved brand. This is also supported by Fournier and Alvarez (2012), who noted that BL results from an organization's high-intensity engagement with its customers. That is, BL is reflected in the actions taken by an organization to increase a customer's emotional attachment to a particular brand. So, if promises are kept, customers will always have a strong emotional connection to the brand. This makes customers resistant to competitive forces and makes them more likely to buy from the brand again.

Furthermore, the findings suggest that fulfilling psychological contracts involves generating PWOM. The majority of beauty salon customers receive PWOM from their friends, family and relatives based on their own personal experiences and impressions of a product or service. If psychological contracts are fulfilled, word-of-mouth can be the most effective information source for increasing customers' intent to repurchase at a beauty salon. This is similar to the study by Kageyama and Barreda (2018), which revealed that when an organization fulfils psychological contracts with its customers, those customers are more likely to positively recommend the brand to other consumers, primarily their relatives and friends. That is to say, they never fail to highlight the positive aspects of a product or service and encourage other consumers to start using them.

The results on the relationship between BL and repurchasing intention have also been suggested by Gómez and Pérez (2018) who emphasized the significance of satisfying consumers' emotions and suggested that BL has a positive effect and a favourable load on the emotional attitude component of consumers, such as repurchasing intentions. Most of the time, if psychological contracts are met, it means that the customer will develop a strong attachment to the product or service and be happy to keep buying it. Also, while previous research suggests that the intention to switch is one of the greatest challenges for businesses due to ineffective strategies to retain loyal customers, the results of this study indicate that fulfilling psychological contracts is essential for generating positive referrals. The findings are consistent with Leonnard et al. (2017) who noted that positive WOM typically generates repurchasing intent, particularly when service quality is involved. Consequently, customers who think that fulfilling psychological contracts is a good quality of service can tell others about their good experience through word-of-mouth and good impressions. Additionally, Liu and Lee (2016) found a correlation between positive recommendations and repurchase intent.

Conclusion

The study's primary objective was to examine the mediating effects of BL and PWOM on the relationship between PCF and customer intention to repurchase. The study used beauty salons as an example of the problem it identified. With all eight hypotheses supported, it can be concluded that the study's findings outline the optimal strategy for resolving the current customer return problem. By strengthening psychological contracts, companies can increase brand loyalty and PWOM, which makes it more likely that customers will want to buy again.

Implications for theory

This study aimed to determine if BL and PWOM could mediate the relationship between PCF and customer repurchase intent. This is a response to a recent call in the literature for a better understanding of the various customer management problem solutions. All eight hypotheses are strongly supported by the findings, indicating that BL and PWOM are crucial mediators of the relationship between PCF and customer repurchase intent. These findings have contributed to the body of literature. First, the findings reveal that proper management of transactional and relational contracts can increase the likelihood of creating customers with positive emotions and, consequently, BL. In addition, fulfilling transactional and relational contracts increases the likelihood that customers will spread PWOM. Both brand loyalty and PWOM are essential for increasing customer intent to repurchase. These findings also suggest new ways of handling customers by decreasing customer switching intentions through increasing customer repurchase intentions.

Intriguingly, the findings suggest that PCF appears to be more significant in social exchange contexts, such as customers' and organizations' general expectations of future benefits. However, PCF increases customer repurchase intent more effectively when other customer-related variables are included. According to the study, incorporating variables such as BL and PWOM increases the effectiveness of psychological contracts. BL and positive referrals are impacted by the extent to which psychological contracts are met. When customers do things with their friends that make them feel closer to a brand emotionally, they become more loyal to that brand.

Implications for management practice

The findings of the study highlight the importance of recognizing PCF, cultivating BL and emphasizing positive recommendations from customers with repurchasing intentions. The managerial implications are developed based on the findings of the specific hypothesis. The findings of the influence of PCF on BL and PWOM imply that organizations must improve and fulfil their transactional and relational contracts in order to increase BL and PWOM among customers. Proper strategies relating to monetary-related rewards and relational strategies such as enhancing customer care will result in a marketing strategy that aims to convert customers into brand advocates and loyal customers.

Second, organizations are urged to develop appropriate short- and long-term training for their employees as well as support them in attending entrepreneurial-related workshops in order for them to have effective customer service strategies. This is important because developing BL and PWOM is a long-term strategy that necessitates strong organization–customer relationships. Similarly, organizations must improve their ways of handling service failures. Despite the fact that it is common that service failure is unavoidable under normal circumstances, PCF must be a top priority for recovery strategies. For example, companies can solve customer problems by giving them money through promotions and improving their customer support.

Limitations and suggestions for future studies

This survey sampled beauty salons solely. Given that each type of organization may have a unique way of fulfilling psychological contracts, future studies may include more categories, such as restaurants and craftsmanship, to broaden the sample. Additionally, this study utilized female beauty salons. Therefore, future research could include salons that cater to women and men to boost the sample's generalizability. Also, apart from the fact that this is a cross-sectional study and not based on time series data, future research can examine how customer intention to purchase habits vary over time. This is critical because customer behaviour is a dynamic process influenced by other factors other than just psychological contract fulfilment. Additionally, this study concluded that BL and PWOM are the most effective variables for resolving consumer satisfaction challenges. However, additional variables may also serve as mediating variables. These variables can include perceived brand values, brand self-expression, consumer brand engagement and consumer brand connection. Moreover, future research may consider BL and PWOM as moderators of the relationship between psychological contract fulfilment and customer repurchasing intent.

Figures

Figure 1

Conceptual model

Table 1

Demographic characteristics of customers

Items	Frequency	Percentage (%)
Age groups
18–38	132	33
39–59	246	61.5
60+	22	5.5
Total	400	100
Level of education
Secondary level	58	14.5
College level	342	85.5
Total	400	100
Nature of the job
Self-employment	101	25.3
Employed in private firms	243	60.8
Government employment	56	13.9
Total	400	100

Table 2

Measurement items, model validity and reliability

Constructs/Items	Loadings	AVE	MSV	Cronbach alpha	Construct reliability
Transactional psychological contracts (TPC)		0.594	0.260	0.729	0.813
Competitive prices of my current beauty salon compared to other companies (tpc1)	0.683
The price of my current beauty salon is tied to the level of service performance (tpc2)	0.847
Prices of my current beauty salon decreased to maintain my needs (tpc3)	0.773
Relational psychological contracts (RPC)		0.610	0.102	0.713	0.824
The extent to which my current beauty salon treats me is fair and impartial (rpc1)	0.837
The extent to which am respected by my current beauty salon (rpc2)	0.761
The amount of all kinds of support I received from my current beauty salon (rpc3)	0.742
Brand love (BL)		0.704	0.176	0.816	0.943
I feel personally satisfied to buy the service from my current beauty salon (bl1)	0.809
I am very attached to services from my current beauty salon (bl2)	0.826
I take pleasure in buying and using the services and products of my current beauty salon (bl3)	0.726
There is nothing more important to me than my relationship with my current beauty salon (bl4)	0.909
I am always happy to use products and services from my current beauty salon (bl5)	0.856
This brand makes me feel good, totally awesome and purely delighted (bl6)	0.877
I love this brand so much and am very attached to this brand (bl7)	0.856
Positive w ord of m outh (PWOM)		0.607	0.152	0.819	0.884
I will say positive things about this beauty salon to other people (pwom1)	0.921
I will recommend this beauty salon to someone who seeks my advice (pwom2)	0.821
I will encourage friends and relatives to visit this beauty salon restaurant (pwom3)	0.694
My current beauty salon provides me with information relevant to my need (pwom4)	0.718
My current beauty salon provides me with sufficient information (pwom5)	0.718
Customer purchasing intention (CPI)		0.657	0.260	0.863	0.905
I will keep using services from this beauty salon over others (cpi1)	0.881
I always prioritize services from this beauty salon for future use (cpi2)	0.817
I will keep using services from this beauty salon, although other brands are more famous (cpi3)	0.774
I will remain loyal to this beauty salon without thinking of other competitors (cpi4)	0.681
If there is a shortage of beauty salon services, I do not directly switch brands (cpi5)	0.883

Table 3

Discriminant validity

	MEAN	SD	CR	AVE	MSV	PWOM	TPC	RPC	BL	CPI
PWOM	0.452	0.121	0.884	0.607	0.152	0.779
TPC	0.397	0.083	0.813	0.594	0.260	0.270	0.771
RPC	0.412	0.103	0.824	0.610	0.102	0.230	0.320	0.781
BL	0.356	0.043	0.943	0.704	0.176	0.320	0.420	0.230	0.839
CPI	0.417	0.109	0.905	0.657	0.260	0.390	0.510	0.190	0.260	0.811

Table 4

Path analysis

Path Models		Path coefficient	s.e.	t-statistics	p-value	Decisions
H1	TPC → BL	0.317	0.089	3.561	0.013	Supported
H2	RPC → BL	0.199	0.034	5.852	***	Supported
H3	TPC → PWOM	0.294	0.071	4.141	0.003	Supported
H4	RPC → PWOM	0.425	0.065	6.538	***	Supported
H5	BL → CPI	0.254	0.098	2.591	0.029	Supported
H6	PWOM → CPI	0.446	0.074	6.027	***	Supported

Note(s): Structural model fit indices: AGFI = 0.917, CFI = 0.961, IFI = 0.974, TLI = 0.901, RMSEA = 0.055 and χ²/df = 1.935; *** p-value < 0.001

Table 5

Process mediation for brand love

Direct effects	Coeff	t	p	LLCI	ULCI
PCF → BL	0.6071	17.1675	***	0.5376	0.6766
BL → CPI	0.3342	6.9951	***	0.2403	0.4281
PCF → CPI	0.1957	4.2476	***	0.1052	0.2863

Mediation effect	Coeff			BootLLCI	BootULCI
PCF → BL → CPI	0.2029			0.1336	0.2791

Note(s): ***p < 0.001

Table 6

Process mediation for PWOM

Direct effects	Coeff	t	p	LLCI	ULCI
PCF → PWOM	0.7670	22.7696	***	0.7008	0.8332
PWOM → CPI	0.3529	6.7323	***	0.2499	0.4559
PCF → CPI	0.4292	7.8151	***	0.3212	0.5371

Mediation effect	Coeff				BootLLCI	BootULCI
PCF → PWOM → CPI	0.2706				0.1644	0.3771

Note(s): ***p < 0.001