The Role of Mediation and Moderation on Customer Loyalty—Evidence from the Restaurant Industry

Abstract

This study aims to explore the impact of mediating variable as trust and word of mouth on customer loyalty in the restaurant industry and the moderating role of various factors such as age, income, the value of money, and repeat purchases on this relationship. Despite previous studies examining the influence of relationship marketing on customer loyalty, the impact of mediating and moderating variables has not been thoroughly analyzed. The study was conducted by surveying 429 customers who recently dined at one of five selected restaurants in Chatoagram, using a non-probability convenience sampling method and a 7-point Likert scale self- administered questionnaire. The mediating effect of trust and word of mouth was evaluated through the Sobel test and the moderating effect of age, income, repeat purchase, and value of money was analyzed through structured equation modeling (SEM).The results indicate that trust and word of mouth play a mediating role in the relationship between relationship marketing drivers such as communication and problem solving, but not for commitment and gratification. Additionally, word-of-mouth was found to mediate the relationship between trust and loyalty. The study found that only income and the value of money were significant moderators of customer loyalty. These findings provide valuable insights for academic researchers and restaurant managers shouting the significance of trust and word of mouth in shaping customer loyalty and the impact of income and the value of money in determining customer loyally. However, it should be noted that the study has limitations such as a focus on only the restaurant industry, limited examination of relationship marketing antecedents, and a narrow geographic scope in Chattogram. There is room for future research to expand the model to other industries and consider other relationship marketing antecedents not explored in this study.