The Taste of Memories: How Nostalgia Marketing Builds Brand Equity and Retains Customers in the FnB Industry

Abstract

Based on the premise of Stimulus–Organism–Response (S-O-R) theory, where stimuli (S) affect internal states of individuals (O), leading to response behaviors (R), the study explores the effects of nostalgia marketing as a stimulus on consumer cognitive states and emotions as dual organism-level mediators, resulting in the formation of multiple dimensions of brand equity, such as brand awareness, quality perceptions, associations, and loyalty, which in turn lead to customer retention as the primary behavioral response. Besides, the study considers the effects of narratives and parasocial relationships on the effect of nostalgic stimuli on cognitive states and emotions. The results of PLS-SEM analysis conducted on a quantitative survey data from 438 respondents living in Ho Chi Minh City reveal that nostalgia marketing has a positive impact on consumer cognition and emotions. Such mediations played a crucial role in predicting all four components of brand equity, which in turn positively contributed toward enhancing customer retention. Narrative structure and parasocial interaction have been recognized as effective moderating factors that strengthen the influence of nostalgic marketing on consumer responses. This research paper adds value to the body of knowledge about S-O-R literature by proposing a two-path model involving brand equity as an intermediary, thereby providing insights to FnB marketers.