Risk aversion and brand loyalty: the mediating role of brand trust and brand affect

Abstract Purpose – The purpose of this paper is to explore the relationship between the customer's risk aversion and its relationship with brand loyalty and to test empirically whether this relationship is mediated by brand trust and brand affect. Design/methodology/approach – A randomly selected sample of Austrian mobile phone users was drawn. Their risk aversion, two forms of loyalty (attitudinal and repurchase loyalty), brand trust and brand affect have been measured with existing and tested scales. The hypothesized model has been tested using PLS (Partial least squares). Findings – Customer's risk aversion is significantly related to the two forms of loyalty (attitudinal loyalty and brand loyalty). When brand affect and brand trust are introduced into the model, the previously highly significant relationship between domain‐specific risk aversion and attitudinal loyalty becomes insignificant and the risk aversion‐repurchase relationship becomes much weaker, while risk aversion strongly influences brand trust and brand affect. Research limitations/implications – The findings are limited to mobile phone users. The generalisation of the results could be extended by broadening the list of products, for example with other durable products and services in which brand affect and brand trust may be even more important in developing brand loyalty. Practical implications – This paper explains why certain customers have more trust and experience more affect than others and how this is related to loyalty. Hence, marketers can increase brand loyalty by targeting more risk aversive customers. Originality/value – From a theoretical point of view the results of this study illuminate the relationship between enduring individual differences and important brand related constructs. From a practical point of view, they explain why certain customers have more trust and experience more affect than others. It is hypothesized and demonstrated empirically that risk aversion is also related to loyalty via brand trust and brand affect.