The Effect of Brand Equity on Brand Loyalty with The Mediating Role of Customer Satisfaction: A Case Study of Luckin Coffee in China
Keywords:
Luckin Coffee, Brand Equity, Customer Satisfaction, Brand LoyaltyAbstract
This study examined brand equity’s impact on loyalty through customer satisfaction via Luckin Coffee in China. The research aimed to (1) identify the levels of brand equity, brand loyalty, and customer satisfaction in Luckin Coffee, (2) identify the relationship between brand equity and brand loyalty, and (3) investigate whether customer satisfaction medicates the relationship between brand equity and brand loyalty. This study employed a quantitative approach, collecting data through online questionnaires administered via the Questionstar platform and distributed through coffee group-buy and takeaway chat groups. The data were collected from 400 Chinese consumers who had previously purchased coffee from Luckin Coffee through online platforms, using accidental sampling method. Luckin Coffee consumers are predominantly young (69.5% under 30 years old), comprising mainly students (35.5%) and enterprise employees (28.2%). Most respondents hold a bachelor’s degree (37.8%) and earn no more than ¥5,000 per month (82.3%). More than half of the respondents are female (54.8%), and 95% consume Luckin Coffee at least once a week, with nearly 16% doing so daily. Qualitative data were obtained through semi-structured interviews with five regular Luckin Coffee consumers, focusing on brand equity, customer satisfaction, and brand loyalty. All interviews were audio-recorded with participants’ prior consent. Secondary data were from Google Scholar, Baidu Scholar, and Google Search including academic literature, statistical reports, and other relevant publications. The data were analyzed using structural equation modeling (SEM) and confirmatory factor analysis (CFA).
The SEM analysis confirmed the hypothesized framework, demonstrating strong model fit (χ²/df=1.826, CFI=0.959, GFI=0.922, TLI=0.952, RMSEA=0.046). Descriptive statistics addressed Objective 1 by quantifying the levels of brand equity (=4.08), customer satisfaction (=4.10), and brand loyalty (=4.06).
SEM analysis addressed Objectives 2 and 3. Brand equity showed no significant direct effect on brand loyalty (β=0.311, p=0.147), whereas its indirect effect via customer satisfaction was significant (β=0.646, p<0.001), confirming full mediation as hypothesized. The results indicate that brand equity indirectly influences brand loyalty through customer satisfaction (direct effect negligible), thereby positioning customer satisfaction as the critical mediator. The findings provide actionable strategies for FMCG brands to prioritize customer satisfaction over price-driven tactics. The findings guide managers in transitioning from discount dependency toward building enduring customer loyalty through consistent product quality, localized co-branding, and balancing affordability with emotional engagement to avoid commoditization.
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