Customer based brand equity a study of trung nguyen coffee in viet nam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Kim Nhung ID: 22110042 CUSTOMER-BASED BRAND EQUITY A STUDY OF TRUNG NGUYEN COFFEE IN VIETNAM MASTER OF BUSINESS (Honours) SUPERVISOR: Prof LE NGUYEN HAU HO CHI MINH CITY - August, 2014 ACKNOWLEDGMENTS This research could not have been done without the help and contributions of many people that I am very thankful to First of all, I would like to express my deepest acknowledge to my supervisor, Professor Le Nguyen Hau for his help, valuable advices and recommendations Especially during the whole time of doing thesis, his patient helps me to get through all mistakes in my work Moreover, he also teaches me much more than just finishing this thesis Again, I want to say “Thank You Very Much” to my advisor for all he has done for me I would like to use this chance to express my earnest appreciation to the professors and lecturers of International School of Business (ISB) – UEH for their guiding me in during my academic years at ISB I have been assisted very much in the completing of this thesis by the knowledge and skills that I have learned Furthermore, I would like to appreciate the contribution of people who help me complete the survey questionnaires to share their valuable time and support me with useful information for completing this thesis I also want to say “Thank You” to my friends, other senior students at ISB, who are doing thesis at the same time with me, for your supporting and encouragement during this difficult period of time and two years studying as well Most of all, we like to thank our families and friends for their unconditional support and understanding during the research process TABLE OF CONTENTS CHAPTER I INTRODUCTON 1.1 Background of research 1.2 Research problem and purpose 1.3 Research objective 1.4 Scope of the study 1.5 Contribution of the study 1.6 Organizational structure of the study CHAPTER II LITERATURE REVIEW & THEORETICAL FRAMEWORK 2.1 Concepts & Definitions 2.1.1 Overview of branding 2.1.2 Brand equity 2.1.3 Customer based brand equity 11 2.1.4 Aaker’s Brand Equity Model 12 2.2 Research model 15 2.2.1 Brand awareness 16 2.2.2 Brand association 17 2.2.3 Brand loyalty 18 2.2.4 Perceived quality 19 CHAPTER III RESEARCH METHOD 21 3.1 Research methodology 21 3.2 Quantitative approach 21 3.3 Questionnaire design 22 3.4 Sampling 27 3.5 Pilot test 28 3.6 Data collection 28 3.7 Data analysis 29 CHAPTER IV DATA ANALYSIS & DISCUSSIONS 32 4.1 Respondent demographic profile 32 4.1.1 Sample demographic 33 4.1.2 Central tendencies measurement of construct 34 4.2 Evaluation and refinement of measurement scale 36 iv 4.2.1 Reliability analysis 36 4.2.2 Exploratory factor analysis 39 4.2.2.1 EFA results for measurement scales of independent factors 40 4.2.2.2 EFA results for measurement scales of dependent factor – brand equity 42 4.2.2.3 Testing the relationship of independent factors and dependent factor 42 4.3 Hypothesis testing 44 4.4 Discussion 48 CHAPTER V CONCLUSIONS & RECOMMENDATION 49 5.1 Conclusion 49 5.2 Recommendation 50 5.2.1 Perceived quality 51 5.2.2 Brand loyalty 53 5.2.3 Brand association 55 5.3 Limitation and future research 57 REFERRENCES 59 APPENDIX A 65 APPENDIX B 71 APPENDIX C 78 v LIST OF TABLES Table 3.1: Measurement scale 23 Table 4.1: Demographic profile 30 Table 4.2: Descriptive statistics 33 Table 4.3: Reliability Statistics 37 Table 4.4: Rotated component matrix 41 Table 4.5: Cronbach‟s alpha after EFA 42 Table 4.6: Pearson correlation 43 Table 4.7: Model summary 45 Table 4.8: The coefficients 46 Table 4.9: The hypotheses testing result 47 vi LIST OF FIGURES Figure 2.1: Brand equity 10 Figure 2.2: Aaker‟s Brand Equity Model 14 Figure 2.3: Research model 15 Figure 3.1: Research design 19 Figure 4.1: Final model of the study 44 vii ABSTRACT Brand equity is one of the important concepts in brand management, as well as in business practice and academic research Developing and properly managing brand equity has been emphasized as an important issue for most firms Along with coffee brand in Vietnam, the competition of coffee shop market is fierily and fragmented due to numerous brands strike for consumer attention This study uses Trung Nguyen coffee as example to explore the impact of brand equity in Vietnamese coffee shop market The research is to develop a model to measure the customer based brand equity of Vietnamese Coffee and study the impacts of the brand equity‟s four dimensions on brand equity The findings in this paper with supporting of Trung Nguyen Coffee‟s case study were found that only three dimensions of brand equity (perceived quality, brand loyalty and brand association) have positive effect on Brand equity The study shows that Trung Nguyen Coffee‟s managers and executives should put their efforts primarily on building brand loyalty, brand association and perceived quality in designing the marketing and brand building strategies This study also provides important insights about the understanding of Hochiminh City consumers‟ perceptions of brand equity and its dimensions in the premium roasted coffee market viii CHAPTER I INTRODUCTON 1.1 Background of research According to data from MARD (2013), Vietnam exported 14.5 million bags of green coffee in the first seven months of 2013, an increase of percent over the previous year, designating Vietnam as the second largest coffee exporter in the world Moreover, Vietnam is also known as a coffee country with a long-standing coffee culture with first appeared in 1857 Gradually it becomes a popular and important drink in the lives of many Vietnamese people Nowadays, many coffee brands, both foreign and domestics have been penetrating all over Vietnam to satisfy the huge demand for coffee of Vietnamese people Due to globalization, the domestic coffee market has also become very attractive to foreign investors and many famous international coffee brands have appeared and developed in Vietnam, such as NYDC Coffee, The Coffee Bean and Tea Leaf, Angel In Us Coffee, Starbucks coffee, etc which make the domestic roasted coffee market become more competitive than ever Confidence with many years‟ experience in producing roasted coffee, Vietnamese coffee brands like Trung Nguyen coffee, Highland coffee, Gogo coffee, etc have tried to break into this market Notwithstanding, most companies have admitted it was difficult to increase even a small market share The competition of coffee market in the segment of premium roast coffee is now moving from price and product‟s quality to brand building, particularly, the branding and product image are becoming more and more significant to Vietnamese customers So, brand equity is recognized as an important part that assisting Vietnamese coffee marketers or companies increase competitive advantage and assist to make management decision Beginning with the application of trademarks to products for the purpose of product differentiation, brands have developed and become one of the key success factors in firms achieving competitive advantage though differentiation (Wood, 2000) Brands create added value for both firms and customer According to Aaker (1991), brands play a key role in increasing the value of products and protecting the product from being imitated by competitors If Vietnamese roasted coffee brands could deeply understand the importance and get benefit from brand equity, they get greater profit and loyal customers These circumstances motivated me to investigate the relationship between selected brand equity‟s dimensions and brand equity Founded by Dang Le Nguyen Vu in 1996, Trung Nguyen coffee was a small business processing coffee in Ban Me Thuoc city At that time, Vietnam had risen once again to be one of the leading coffee producers in the world, but almost solely producing "green" coffee (unroasted beans) that were sold on the commodity market This resulted in no control over the final coffee quality or prices In 1998, the first Trung Nguyen coffee shop was officially launched in Ho Chi Minh City In 2001, Trung Nguyen coffee shops were launched in all provinces Up to now, Trung Nguyen coffee has more than 50 coffee shops operating throughout Vietnam Trung Nguyen coffee is confident in the future of sustainable development with the emergence and continuous growth of the country At the beginning, Trung Nguyen Coffee has recognized the importance of branding and always tried to build its brand to become a high-class brand of coffee for customers who have high income 1.2 Research problem and purpose Competition is the most fundamental factor that directly affects the brand emergence and growth (Laaksonen, 1994) Today, the competition is fiercely in all fields due to the threat of new entrances and rivals, coffee shop market are not an exceptional The company always try to outperform their competitors to grab a greater share of market, thus, an appropriate marketing strategy is necessary Here, brand equity is a concept in marketing field which plays an important role that affects developing business for a company When the market is full of competition, the brand, the style and the quality of a product are vital points in customer‟s selection Vietnamese roasted coffee brands have spent much money on producing mass of products, reducing prices, and introducing promotional campaigns to attract customers but they forget that customers always choose famous, trusted and reliable brands Up till now, many domestic coffee enterprises cannot build their own unique brand in an effective way associated with their roasted coffee Most of them have not yet achieved national recognition 1.3 Research objective The main purposes of this study are to understand of the brand equity concept employ in marketing Especially, to measure and examine the effectiveness of brand equity dimensions, i.e., brand awareness, brand association, perceived quality and brand ... widely accepted in the branding literature is that by Aaker (1991, p 15) Aaker (1991) defined brand equity as ? ?a set of brand assets and liabilities linked to a brand, its name and symbol, that add... and brand loyalty on consumer based brand equity creating and also determine what dimensions of customer based brand equity have positive effect on the brand equity of Trung Nguyen Coffee The finding... globalization, the domestic coffee market has also become very attractive to foreign investors and many famous international coffee brands have appeared and developed in Vietnam, such as NYDC Coffee,