The effect of some marketing mix elements on brand awareness and brank image

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY oOo - DIỆP THỊ PHƯƠNG THẢO THE EFFECT SOME MARKETING MIX ELEMENTS ON BRAND AWARENESS AND BRANK IMAGE MAJOR: BUSINESS ADMINISTRATION MAJOR CODE: 60.34.05 MASTER THESIS INSTRUCTOR: DR TRAN HA MINH QUAN Ho Chi Minh City – 2011 I ACKNOWLEDGEMENT This thesis is dedicated to my family, friends, professors and classmates for their support and encouragement throughout my academic career Recently, these people have touched my life in many different ways First and foremost, I would like to give special thanks to Dr Tran Ha Minh Quan for being an excellent professor, advisor, thesis committee chair, and mentor I appreciate all the insight and time he put into helping me with my thesis I am also grateful to him for teaching me the basics, and advancing my knowledge and expertise I’d like to thank Dang Huu Phuc, who helped me in the data analysis Many thanks my professors and classmates in MBA class, Batch 17 for their valuable and enthusiastic support for this research study My special gratitude is extended to all instructors, staff and students at Faculty of Business Administration, University of Technology HoChiMinh City (HUTECH) for their support and the valuable knowledge during my study Last but not least, the deepest and most sincere gratitude go to my beloved parents, my husband, my daughter and my closest friends for their boundless support, abundant love and encouragement throughout my period of study I,therefore, dedicate this work as a gift to them all II ABSTRACT The marketing effort orientated to towards strengthening the brand means to increase the degree of knowledge of the brand name In this paper we want to show the relationship between marketing effort and brand awareness and brand image Starting out from a theoretical review, we set out a model of effects of the marketing effort -as the brand's antecedents- on brand awareness and brand image In order to test the defined structural model and research hypotheses empirical research was conducted on the sample of undergraduate students of the Faculty of Business Administration in University of Techonology The structural model of the effects of marketing mix elements on brand equity is defined in line with the existing theoretical findings Research hypotheses are defined according to the identified structural model Research results indicate that the structural model has an acceptable level of fit to the empirical data The estimated structural coefficients and indirect effect coefficients indicate the direction and intensity of effects of each analysed element of marketing mix on brand awareness and brand image Finally, implications of research results for the theory and practice of brand management are analysed and discussed KEY WORDS: Brand Image, Brand Awareness, marketing effort, Measurement Model III TABLE OF CONTENTS ACKNOWLEDGEMENT I ABSTRACT II TABLE OF CONTENTS III LIST OF FIGURES V LIST OF TABLES VI Chapter1 : Introduction 1.1 1.2 1.3 1.4 1.5 1.6 1.7 Introduction Research Background Research Motives Problem statement Research Ojective Research methodology and design Research Procedure Chapter : Literature review .7 2.1 Introduction 2.2 Brand 2.2.1 Brand Awareness 2.2.2 Brand image 11 2.3 Marketing efforts 13 2.3.1 Advertising 13 2.3.2 Distribution intensity 14 2.3.3 Store image 15 2.3.4 Price deals 16 2.4 Relationship between marketing effort and brand awareness and brand image 17 2.5 Conclusion 21 Chapter : Methodology 22 3.1 Introduction 22 3.2 Research design 23 3.3 Item generation 25 3.3.1 Introduction 25 3.3.2 Operationalization of measures 25 3.4 Preliminary study 29 3.5 Main survey 32 3.5.1 Brand selection 32 3.5.2 Sampling 32 IV 3.6 Conclusion 33 Chapter : Research results .34 4.1 Introduction 34 4.2 Descriptions of sample 34 4.3 Scales assessment 36 4.3.1 Reliability testing 36 4.3.2 Exploratory factor analysis 38 4.4 Testing the research model and the hypotheses 42 4.4.1 Testing correlations between all constructs 42 4.4.2 Testing research model 42 4.4.2.1 The relationship between marketing efforts and the brand awareness.42 4.4.2.2 The relationship between marketing efforts and the brand image 46 4.5 Testing the effect of brand awareness and brand image on the year in college: 49 4.6 Findings and conclusion 51 4.6.1 Findings 51 4.6.2 Conclusion 51 Chapter : Conclusions and implications 53 5.1 Introduction 53 5.2 Conclusions of the study 53 5.2.1 Summary of all hypotheses 53 5.2.2 Conclusions of the study 54 5.3 Implications of the study 57 5.4 Limitations and recommendations for further research 58 List of References 60 Appendix – Questionnaire (Vietnamese version) 63 Appendix - Descriptive Statistics of variables 67 V LIST OF FIGURES Figure 1-1 : Outline of chapter Figure 1-2 : Structure of the study Figure 2-1 : The structure of Chapter Figure 2-2 : Dimensions of Brand Knowledge, Keller (1993) Figure 2-3 : Model of effects of marketing efforts on brand awareness and brand image 21 Figure 3-1 : Outline of chapter 22 Figure 3-2 : Research process 24 Figure 4-1 : Outline of chapter 34 Figure 4-2 : Whether used motocycles 36 Figure 4-3 : Owning brand 36 Figure 4-4 : Relationships between perceived advertising spending, distribution intensity and the brand awareness 42 Figure 4-5 : Results of model I 45 Figure 4-6 : Relationships between marketing efforts and brand image 46 Figure 4-7 : Results of model II 48 Figure 4-8 : Adjusted the structural model of impact of marketing effort on brand awareness and brand image 52 Figure 5-1 : Outline of chapter 53 VI LIST OF TABLES Table 3-1 : Measures of perceived advertising spending 26 Table 3-2 : Measures of distribution intensity 27 Table 3-3 : Measures of brand image 27 Table 3-4 : Measures of price deals 28 Table 3-5 : Measures of brand image 28 Table 3-6 : Measures of brand awareness 29 Table 3-7 : The final questionnaire 30 Table 4-1 : Sample characteristics 35 Table 4-2 : Reliability of the measurement instrument 37 Table 4-3 : Rotated component matrix 40 Table 4-4 : EFA result for individual measurement scales 41 Table 4-5 : The correlations among the dimensions of brand equity 43 Table 4-6 : The results of linear regression analysis_Model I 44 Table 4-7 : Summary of hypotheses testing results (Model I) 45 Table 4-8 : The results of linear regression analysis_Model II 46 Table 4-9 : Summary of hypotheses testing results (Model II) 48 Table 4-10 : Multiple Comparisons 50 Table 5-1 : Summary of hypotheses 54 1 Chapter1 : Introduction 1.1 Introduction This chapter portrays general introduction for the current study with which research background, research motives, research objectives, and research procedures are provided as the rationale for this study An introduction to the methodology to be used and the scope of the study is also addressed in this chapter At the end of the chapter, the structure of this study is provided The Outline of this chapter is shown in figure 1.1 Figure 1-1 : Outline of chapter 1.1 Introduction 1.2 Research Background 1.3 Research Motives 1.4 Research Ojective 1.5 Research Procedure 1.2 Research Background Kathman (2002) described the importance of brand building based on today’s market situation The author said that as the use of new media (e.g., internet), the rate of transformation in marketplace, and the speed of globalization increase, the role of branding becomes more important than any other season Kathman added that market fragmentation, product diversity, and short-life-cycle brands also show the importance of building brand equity in the present market situation The author concluded that brand building is the only way to thrive their business in today’s market situation The author also added that, in these days, we have many products and brands and the market is segmented so much that make it difficult for the audience to recognize or recall the brand Studies on branding issue receive the great attention in marketing area in other countries The growing interest is reflected in the proliferating conferences, articles, and press attention on branding, as well as the companies’ huge investments on this area Brands are powerful strategic weapons which, if handled correctly and managed sensibly, can provide their owners with considerable rewards in terms of market share growth and corporate profitability (Aaker, 1996) Branding has always been crucial for anyone who wants to sell something to gain credibility (Keller, 2003) Yet, the concept of a brand which represents the specifics of a product or a company, like a name which describes the character of the person it belongs to, is a new one in Vietnam Most Vietnamese firms are small or medium sized and have not dealt with problems related to the branding issue The media had not highlighted it until several Vietnamese brands were recently appropriated overseas (VnExpress, 2002; VET, 2003) The severe shortage of commodities in the late 1980s and early 1990s consolidated manufacturer’s lack of awareness about branding, particularly bearing in mind the low per capita income of Vietnamese people But the mushrooming of new producers and service suppliers and the arrival of foreign competitors has caused things to change drastically An abundance of goods and services of higher quality, advanced technologies, and shorter product life spans have forced local businesses to think seriously about building brands which can give them long term and sustainable development (VET, 2003) Right now, building brands is a very important issue in developing country as Vietnam, and it can be considered to be a useful topic for conceptual development and managerial relevance In several studies, brand awareness and image are considered the most important components of brand equity (Keller, 1993) However, only a few studies delved into how these components are correlated with products or services 1.3 Research Motives To date, there have been a number of studies that have attempted to examine how consumers think about, respond to, and classify brands within their minds Branding literature has provided theoretical perspectives to help marketers understand the construct of brand Brand equity has become a hot topic for chief executives, accountants and academics as it is tipped to join other critical measures of long-term business performance At the same time, the 'knowledge economy' is becoming an accepted framework for management thinking, planning and organisation It is perhaps surprising, therefore, that the designated marketing function in so many companies has done so little to advance the management of one of their most value-adding activities - brand knowledge Indeed, it is nearly 40 years since Theodore Levitt pointed out the unique perspective of marketing: "The difference between marketing and selling is more than semantic Selling focuses on the needs of the seller, marketing on the needs of the buyer Selling is preoccupied with the seller's need to convert the product into cash, marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.” During those four decades, marketing departments have grown as substantially as their budgets, huge quantities of data swamp the brand teams and yet the evidence suggests they have not strengthened their grip on 'knowing and understanding' their users better Over the same period the reputation of the marketing function has declined in many companies 53 Chapter : Conclusions and implications 5.1 Introduction Chapter presented the analysis results and the main findings of the study A modified model was also proposed in the chapter This chapter summarized all hypotheses that will be used to answer for the research questions in this chapter Some implications are suggested for academics and practitioners as well The limitations of this study and some suggestions for further research are also presented in this chapter The structure for chapter five is showed in figure 5.1 Figure 5-1 : Outline of chapter 5.1 Introduction 5.2 Conclusions of the study 5.3 Implications of the study 5.4 Limitations and recommendations for future research 5.2 Conclusions of the study 5.2.1 Summary of all hypotheses To draw the conclusion for this study, the hypotheses testing results are repeated in table 5.1 for easier reference 54 Table 5-1 : Summary of hypotheses Hypotheses Confirmed H1 : The major perceived advertising spending that the company YES invests in the brand positively affects brand awareness H2 : The major perceived advertising spending that the company YES undertakes for the brand positively affects brand image H3 :The level of intensity perceived with which a product is YES distributed as a brand positively affects a _brand's degree of awareness H4 :The level of intensity perceived with which a product is NO distributed as a brand positively affects its _brand image H5 : The store image positively affects the set of associations YES linked to the brand and that agree with its brand image H6 : The use of price deals for the brand has a negative effect on its image H7: There is a significant difference between the year in college and brand awareness YES H8: There is a significant difference between the year in college and brand image YES YES 5.2.2 Conclusions of the study From the analysis outcomes and the findings presented in chapter 4, with reference to the above tested hypotheses, this study concludes that the first research question is fully positively answered This means that different marketing mix elements impact the creation of brand equity with different levels of intensity, as well as that some elements of marketing mix can negatively affect the creation of brand equity The results recognize two types of marketing managerial efforts from a long-term perspective of brand management: brand-building activity and brand-harming 55 activity According to this analysis, frequent use of price promotions is an example of a brand-harming activity High advertising spending, distribution through retailers with good store images, and high distribution intensity are examples of brand-building activity The findings and strategic implications for each marketing mix element examined are discussed Advertising The hierarchy of effects model has shown that consumers tend to believe advertising statements and envision the product's likely performance on the basis of the claims (Richins 1995) Hence, as consumers are exposed to a brand's advertising more frequently, they develop higher brand awareness Brand image is complicated, based on multiple experiences, facts, episodes, and exposures to brand information, and therefore takes a long time to develop Advertising is a common way to develop, to shape, and to manage that image Managers should invest in advertising with a clear objective of increasing brand equity To summarise, perceived advertising spending showed a favourable causal relationship for two components of the brand equity analysed The higher the spending on advertising for the brand, the higher the level of brand awareness and the more associations linked to the motocycle and forming its brand image Distribution intensity The level of intensity in the motocycle retailing, though it has showed a low positive influence (value of the structural coefficient) on brand awareness, that is, that a greater presence in the stores increases the brand's level of awareness of the name of the brand of motocycle; in the case of brand image, the favourable relationship proposed in the initial hypothesis has been confirmed in the opposite sense.Making a product available in more stores affords convenience, time savings, speedy service, and service accessibility, thus increasing customer satisfaction This 56 might be true even for luxury products, for which managers traditionally tend to use a limited number of vendors However, such a role of distribution intensity might seem invalid because of the fit between distribution intensity and the type of product Intensive distribution fits convenience goods, whereas selective distribution fits shopping or specialty goods Therefore, high distribution intensity may offer high brand equity for all types of products, although the effect varies somewhat depending on product luxuriousness Store image Managers should distribute products through vendors that have a good image because consumers infer the quality of products from the image and reputation of the store Similar to price, retail reputation is an important signal of product quality (see Dawar and Parker 1994; Grewal, Krishnan, Baker, and Borin 1998) Also, word of mouth and the store's promotional activity enhance brand associations Therefore, selecting good image stores as product vendors builds strong brand equity This result underlines the importance of the brand manager’s active approach in selecting and designing the distribution channels In doing this, special heed should be paid to the effect of the selected stores on brand image, as well as that, when selecting the distribution channel members, the image of the potential channel members and the potential impact of their image on brand image, and thus the brand equity, is included as a criterion in the decision-making process Price promotions Frequent use of price promotions, such as price deals, coupons, refunds, and rebates, causes consumers to infer low product quality Because they lead consumers to think primarily about deals and not about the utility provided by the brand (i.e., brand equity), price promotions not enhance the strength of brand associations The research results indicate that brand managers should be very careful when applying price deals as a marketing mix element Even though price deals may lead to certain short-term financial gains resulting from a short-term sales 57 increase, in the long run a frequent use of this marketing mix element may cause a reduction in brand equity because of the negative influence of price deals on brand image, and thus may eliminate the short-term benefits that may arise from the use of this method Instead of offering price promotions, managers should invest in advertising to develop brand equity To answer the second research question, the results in chapter reveal that there is a significant difference between the year in college and brand awareness and brand image 5.3 Implications of the study This conclusion has several important implications for strategic brand management First, the obtained research results point out very clearly to the importance of a strategic approach for brand management, with creation of brand equity, and not just brand sales, being a criterion for deciding on the application of specific marketing mix elements The research results also implicate that when allocating marketing budgets to individual marketing elements attention must necessarily be paid to the potential impact of a specific marketing mix elements on the creation of brand equity This further means that the potential impact of individual marketing mix elements on brand equity must be included as criterion in deciding on the allocation of marketing budgets to individual marketing mix elements The research results point out to the need for careful selection of individual marketing mix elements in order to avoid deterioration of the achieved brand equity This additionally emphasizes the importance of a strategic approach to brand management as a means of avoiding that fulfilment of certain short-term goals (e.g short-term increase in sales) disrupts the possibility for long-term sales growth and achievement of sustainable competitive advantages, undoubtedly resulting from high brand equity 58 Furthermore, the research results indicate that managers, in their efforts to build the equity of the brands they are managing, should primarily focus on the creation of brand awareness and a positive brand image In the tested model, the said two variables are affected by managers through marketing mix elements, and these two variables have a direct impact on brand equity All activities aimed at positively impacting the brand equity should be focused either on increasing the brand awareness or on improving the brand image, or both 5.4 Limitations and recommendations for further research Although it provides theoretical and substantive explanations, our research has several limitations Overcoming them can be a direction for future research First, our sample is limited geographically Our hypothesis should be tested further in other countries to get a universal data Second, a major conceptual limitation is that our model tests only a few marketing efforts Future studies should examine more marketing actions such as pricing and sponsorship, needs to be studied Third, our study examines the effect of individual marketing decision variables and does not investigate the interactions among them Product could interact with price, and promotion could interact with distribution It is the mix of marketing strategies that both scholars and managers need to understand in the context of developing and improving brand equity Future research should explore the interaction effect of marketing mix on brand equity Fourth, generalizability of the findings can be enhanced, replicating this study with more product categories, including profit or nonprofit services and industrial products, different types of subjects, and other cultures In particular, cross-cultural 59 research may reveal different processes of brand equity formation in different cultures Cultural differences may moderate the effect of marketing efforts on brand equity Little empirical research on brand equity in international markets has been reported In addition, we ignore the contingencies under which marketing efforts might have 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Journal of Marketing 52 (July): 2-22 63 Appendix – Questionnaire (Vietnamese version) Xin kính chào Anh / Chị Xin chân thành cảm ơn Anh / Chị nhận lời tham gia trả lời vấn Bảng câu hỏi tập trung tìm hiểu chiến lược xúc tiến ảnh hưởng đến nhận biết thương hiệu hình ảnh thương hiệu [X] Do vậy, khơng có câu trả lời hay sai mà thông tin cung cấp Anh / Chị có giá trị nghiên cứu tơi Rất mong Anh / Chị trả lời ĐẦY ĐỦ câu hỏi mức độ xác cao Mọi thơng tin cá nhân Anh / Chị giữ kín Trân trọng kính chào I Thơng tin chung Xin Anh / Chị vui lòng cho biết tên: ………………………………………………………… Tên nhãn hiệu xe máy mà Anh / Chị sử dụng ( ký hiệu X ) Honda SYM Yamaha Suzuki Khác :……………………………… Giới tính: Nam Anh / Chị sinh viên năm : Năm Năm Năm Năm Nữ 64 II Câu hỏi chiến lược xúc tiến nhận biết, hình ảnh thương hiệu Xin Anh / Chị cho biết mức độ đồng ý Anh / Chị phát biểu theo thang điểm từ đến 5, với quy ước: 1: Hoàn toàn phản đối đến 5: Hồn tồn đồng ý (xin khoanh tròn số thích hợp cho phát biểu) Hồn tồn đồng ý Đồng ý Bình thường Khơng đồng ý Hồn tồn không dồng ý Phát biểu Quảng cáo Tôi nghĩ quảng cáo nói chung tốt Nói chung, tơi thích chiến dịch quảng cáo Tôi quan tâm đến quảng cáo X Chiến dịch quảng cáo cho X nhiều tiền 5 5 nhãn hiệu X so với chiến dịch quảng cáo đối thủ cạnh tranh khác Tôi nghĩ nhãn hiệu X quảng cáo dày đặc nhãn hiệu khác Các chiến dịch quảng cáo X thấy thường xuyên Tôi nhớ chiến dịch quảng cáo 65 X Giảm giá Tơi nghĩ giảm giá nói chung tốt Nhìn chung, tơi thích đợt giảm giá 5 Nhãn hiệu X thường hay giảm giá Các đợt giảm giá X nhấn mạnh 5 5 Cửa hiệu nơi mua X chỗ tốt Cửa hiệu nơi mua X nơi uy tín Cửa hiệu nơi tơi mua X khơng có khung cảnh 5 5 thương hiệu X Tôi quan tâm nhiều đến đợt giảm giá nhãn hiệu X cách thái Tôi nghĩ X hay giảm giá đối thủ cạnh tranh khác Các đợt giảm giá X xuất nhiều Hình ảnh cửa hiệu Cửa hiệu nơi tơi mua X bán sản phẩm chất lượng cao tốt Cửa hiệu nơi tơi mua X bán nhãn hiệu bình dân Cường độ phân phối So với hãng xe khác, tơi tìm thấy X nhiều cửa hàng Hãng xe X cẩn trọng việc lựa chọn đại lý phân phối đối thủ cạnh tranh 66 khác Nhãn hiệu X sẳn có hầu hết cửa hàng Tôi biết X trông Tơi nhận nhãn hiệu X nhãn Tơi có để ý đến nhãn hiệu X Tôi biết nhãn hiệu X 5 X có cá tính mạnh mẽ Tơi có ấn tượng rõ ràng mẫu người sử dụng X có hình ảnh mạnh mẽ Những thuộc tính vơ hình nhãn hiệu X đủ 5 Nhận biết thương hiệu hiệu cạnh tranh khác Hình ảnh thương hiệu Một vài đặc tính X lên đầu tơi cách nhanh chóng Tơi nhớ lại biểu tượng logo X nhãn hiệu X để mua X đáng giá số tiền mà ta bỏ để mua Xin chân thành cảm ơn giúp đỡ quý báu anh / chị ! Phỏng vấn lúc….…….giờ… … ngày… …./… … / 2011 Phỏng vấn : ……………………………………………… 67 Appendix - Descriptive Statistics of variables N Minimum Maximum Mean Std Deviation PAS1 205 1.00 5.00 3.4683 1.04094 PAS2 205 1.00 5.00 3.4000 98817 PAS3 205 1.00 5.00 3.4683 94725 PAS4 205 1.00 5.00 3.5610 1.12129 PAS5 205 1.00 5.00 3.5561 1.04461 PAS6 205 1.00 5.00 3.5512 97697 PAS7 205 1.00 5.00 3.4000 92142 PD1 205 1.00 5.00 3.3951 97768 PD2 205 1.00 5.00 3.4390 93013 PD3 205 1.00 5.00 3.3024 93737 PD4 205 1.00 5.00 3.5561 1.01606 PD5 205 1.00 5.00 3.4195 1.02881 PD6 205 1.00 5.00 3.3073 1.00401 PD7 205 1.00 5.00 3.2390 1.11427 SI1 205 1.00 5.00 3.0780 1.07729 SI2 205 1.00 5.00 3.2585 1.06481 SI3 205 1.00 5.00 3.2634 1.07961 SI4 205 1.00 5.00 3.3415 1.00999 SI5 205 1.00 5.00 3.1951 1.10302 DI1 205 1.00 5.00 3.5220 1.12710 DI2 205 1.00 5.00 3.3317 1.06514 DI3 205 1.00 5.00 3.5024 1.10091 BA1 205 1.00 5.00 3.2829 1.03751 BA2 205 1.00 5.00 3.3610 1.12304 BA3 205 1.00 5.00 3.3805 1.04394 BA4 205 1.00 5.00 3.3707 1.09326 BI1 205 1.00 5.00 3.2341 1.07731 BI2 205 1.00 5.00 3.1805 1.07631 BI3 205 1.00 5.00 3.0780 1.12187 BI4 205 1.00 5.00 3.2878 1.12463 BI5 205 1.00 5.00 3.2732 1.09074 BI6 205 1.00 5.00 3.3366 1.01406 Valid N (listwise) 205 ... effort and brand awareness and brand image Starting out from a theoretical review, we set out a model of effects of the marketing effort -as the brand' s antecedents- on brand awareness and brand image. .. marketing efforts and the brand awareness. 42 4.4.2.2 The relationship between marketing efforts and the brand image 46 4.5 Testing the effect of brand awareness and brand image on the year in college:... of the marketing effort of the companies (measured by means of actions of prices, product, distribution and communication) on dimensions of brand equity -brand awareness and brand image The marketing