Measuring customer based brand equity of english training center

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Ministry of Education and Training University of Economics HoChiMinh City Nguyễn Thanh Trung MEASURING CUSTOMER-BASED BRAND EQUITY OF ENGLISH TRAINING CENTERS: EVIDENCE IN HOCHIMINH CITY ECONOMICS MASTER THESIS HoChiMinh City - 2009 Ministry of Education and Training University of Economics HoChiMinh City Nguyễn Thanh Trung MEASURING CUSTOMER-BASED BRAND EQUITY OF ENGLISH TRAINING CENTERS: EVIDENCE IN HOCHIMINH CITY Major: Business Administration Major Code: 60.34.05 ECONOMICS MASTER THESIS Supervisor: Dr Trần Hà Minh Quân HoChiMinh City - 2009 Acknowledgement I would like to express my heartfelt gratitude and deepest appreciation to my research Supervisor, Dr Tran Ha Minh Quan for his precious guidance, share of experience, ceaseless encouragement and highly valuable suggestions throughout the course of my research I would like to extend my sincere thanks to Assistant Prof Nguyen Dinh Tho, the chairman of the proposal examination committee and Dr Vo Thi Quy, member of the proposal examination committee, for their valuable comments and constructive suggestions My special gratitude is extended to all instructors and staff at Faculty of Business Administration and Postgraduate Faculty, University of Econimics HoChiMinh City (UEH) for their support and the valuable knowledge during my study in UEH I would also like to avail this opportunity to express my appreciation to Professor Nguyen Dong Phong and UEH Board of Directors for creating MBA program in English Specially, my thanks also go to Lecturer Ms Ly Thi Minh Chau for her comments of English from early draft of my thesis Many thanks to Ms Dang Hai Yen, Mr Lam Hong Phong, as well as the other classmates in MBA class, Batch 16 for their valuable and enthusiastic support for this research study Last but not least, the deepest and most sincere gratitude go to my beloved parents, my wife, my sons, my nieces, my nephews 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 Abstract Strong brand equity is significantly correlated with success for English Training Centers (ETC) In a study 318 respondents gauged the strength of four ETC brands doing business in HoChiMinh City, Vietnam The internal relationship between the individual dimensions of customer-based brand equity (CBBE) and applicability of the suggested CBBE scale on the ETC industry have been examined in this study One unusual finding was that five component perceived quality scale of Parasuraman (1988) is not applicable A perceived quality scale including only two components: tangibles and assurance was suggested and the assurance component dominated on the relationship to brand loyalty One other unusual finding was that although brand equity comprises all four dimensions being tested, awareness showed the smallest and non-significant effect on brand loyalty Dividing the ETCs into high tuition fee group and low tuition fee group, the researcher found that learners differentiated all four dimensions of CBBE between the two groups The most of attributes of dimensions had significant mean diference, while other attributes did not Keywords: brand equity; brand image; brand loyalty; brand awareness; perceived quality; assurance; tangibles; English training center Contents Acknowledgement Abstract Contents List of Tables List of Figures Chapter 1: Introduction 1.1 Introduction 1.2 Research background 1.3 Research questions 12 1.4 Scope and Limitation 14 1.5 Research method 15 1.6 Implications of research 16 1.7 Structure of the study 17 Chapter Literature Review 19 2.1 Introduction 19 2.2 Branding 20 2.3 Brand equity 22 2.3.1 Aaker’s conceptualization of brand equity 26 2.3.2 Keller’s conceptualization of brand equity 28 2.4 The measurement of Customer-Based Brand Equity 30 2.4.1 Brand awareness 31 2.4.2 Brand image 32 2.4.3 Brand loyalty 33 2.4.4 Perceived quality 33 2.5 Relationships between brand loyalty and other dimensions of CBBE 34 2.6 Summary 36 Chapter Methodology 38 3.1 Introduction 38 3.2 Research design 40 3.3 Generation items 42 3.3.1 Introduction 42 3.3.2 Operationalization of measures 43 3.4 Preliminary study 46 3.5 Main study 50 3.5.1 Sample design 50 3.5.2 Survey method 53 3.5.3 Data analysis techniques 53 3.6 Conclusion 54 Chapter Research results 55 4.1 Introduction 55 4.2 Descriptive statistics of sample 56 4.2.1 Final sample 56 4.2.2 Characteristics of sample 56 4.2.3 Descriptive statistics 58 4.3 The construct measurement scales 61 4.4 The assessment of customer-based ETC brand equity construct 70 4.5 The assessment of the hypotheses 71 4.5.1 Brand equity rating 71 4.5.2 Testing hypotheses 72 Chapter Conclusion and Implication 85 5.1 Introduction 85 5.2 Conclusions from the research questions 87 5.3 Discussion of the research findings 92 5.4 Contributions of the research findings 94 5.4.1 Theoretical contribution 94 5.4.2 Methodological contribution 96 5.5 Implications of the research 97 5.6 Limitations of the research and further research 99 5.7 Conclusion 99 List of References 101 Appendix 106 List of Tables Table 1 The structure of the study 18 Table Summary of hypotheses 37 Table Research questions and research hypotheses 38 Table Measures of brand loyalty 43 Table 3 Measures of brand image 44 Table Measures of brand awareness 44 Table Measures of perceived quality 45 Table The demographical status of participants 47 Table The final questionnaire 48 Table Response frequency of each brand 56 Table Characteristics of respondents 57 Table Descriptive statistics 58 Table 4 The result of EFA test with 31 items 65 Table The result of EFA with 29 items 66 Table The structure matrix of five factors 67 Table Results of reliability test and EFA test for construct measurement scales 68 Table Final construct measurement scales 69 Table Dimensions of Brand Equity Structure 70 Table 10 Brand equity rating 71 Table 11 Brand equity ranking 72 Table 12 The correlations among the dimensions of brand equity 73 Table 13 The results of linear regression analysis 74 Table 14 The t-test analysis results of four dimensions of brand equity 77 Table 15 Mean differences of brand awareness between high- and low-tuition ETCs 79 Table 16 Mean differences of tangibles component between high- and low-tuition ETCs 80 Table 17 Mean differences of assurance component between high- and low-tuition ETCs 81 Table 18 Mean differences of brand image between high- and low-tuition ETCs 82 Table 19 Mean differences of brand loyalty between high- and low-tuition ETCs 83 Table 20 The summary of the attributes having significant mean differences 83 Table 21 The attributes having significant mean differences between two groups 84 Table Summary of testing results of hypotheses 4, 5, 6, and 90 Table The summary of the attributes having significant mean differences 91 Table Summary of testing result of hypothesis 91 Table Summary of hypotheses testing results 92 List of Figures Figure 1 Structure of chapter Figure The model of the relationship between brand loyalty and the other dimensions 13 Figure The structure of chapter 19 Figure 2 The relationship between product and brand 22 Figure Two approaches to brand equity 24 Figure How Brand Equity Generates Value (Aaker 1996) 27 Figure Dimensions of brand knowledge (Kevin Lane Keller 1993) 29 Figure The conceptual model of customer-based brand equity 31 Figure The relationship between brand loyalty and other dimensions 36 Figure The structure of chapter 39 Figure Research process 41 Figure 3 Brand selection 51 Figure The structure of chapter 55 Figure Sex of respondents 57 Figure Age of respondents 58 Figure 4 The first stage of the assessment of the construct measurement scales 63 Figure The revised model of the relationship between brand loyalty and the other dimensions of brand equity 76 Figure Structure of chapter 86 Figure The results of linear regression analysis between brand loyalty and the other dimensions 88 Figure The revised model of relationship between brand loyalty and the other dimensions 89 Chapter 1: Introduction 1.1 Introduction This chapter provides a general introduction for the current study, by drawing a general picture of the following chapters and the study as a whole, beginning with a general introduction in section 1.1 Section 1.2 examines the research background, in which the gaps in the empirical studies on branding strategies are identified Section 1.3 defines the research questions and lists the research hypotheses In addition, section 1.4 discusses scope and some limitations of the current study Section 1.5 briefly discusses the general aspects of research methodology such as research types and research design Section 1.6 provides implications of this study Section 1.7 introduces the structure of the study The structure of chapter is provided in Figure 1.1 Figure 1 Structure of chapter 1.1 Introduction 1.2 Research background 1.3 Research questions 1.4 Scope and limitations 1.5 Methodology 1.6 Implications of the study 1.7 Structure of the study 1.2 Research background Branding and brand equity have been topics of interest to marketing researchers for many years (Krishnan & Hartline 2001) Traditionally, branding has been focused on tangible products, but in recent decades the focus has expanded to also include branding of services Although branding of services has started to develop, this has not kept pace with the growth of the service sector overall The growth of the service sector has led to increased competition where brand has become an important tool for gaining competitive advantages Branding plays a special role in service companies because strong brands increase customers’ trust of the invisible purchase A strong service brand is essentially a promise of future satisfaction (Berry 2000) Some researchers have also argued that branding is more critical for services than for goods (Krishnan & Hartline 2001; Brady et al 2005) A strong brand can help to reduce the risks associated with the purchase and consumption of many services Other advantages of a strong brand are for example that it creates better margins by adding value to the service, builds stable long-term demand and increases market share Consequently, a strong brand offers many advantages in the service industry and when evaluating the strength of the brand, the concept of brand equity is used Researchers have defined brand equity variously introducing different viewpoints, but there seems to be a basic agreement on the concept of brand equity All these definitions imply that brand equity is the incremental value of a product due to the brand name (Kim et al 2003) Brand equity research in marketing has largely concentrated on customer perception (Kim et al 2008) Keller (1993) defined customer-based brand equity as “the differential effect of brand knowledge on consumer response to the marketing of the brand” Brand equity is a multidimensional concept (Aaker 1996a) Nowadays, it is no longer enough to brand a product just using its name, it is important that all the 93 The results of data analysis demonstrate two components of perceived quality, tangibles ( β = 0.204, sig =0.000), assurance ( β = 0.295, sig =0.000), have significant and positive impact on brand loyalty that provide support for H2 In addition, the assurance component has greater relative influence on brand loyalty than the tangibles component One of these findings was consistent with a previous customer-based brand equity study conducted in a hotel context of Kayaman & Arasli (2007), in which the tangibles component was also positively related to brand loyalty However, the results also showed that there was no significant relationship between brand awareness and brand loyalty This is an unusual finding There are two possible explanations for this unusual finding Firstly, learners decided to be loyal to a brand based on their experience of the brand After finishing a class, a brand was retentive of learners keeping going learning if the brand made learners perceive that brand as providing high quality, assessed through their improvement of English Secondly, this finding may be caused by the intangible characteristics of service industry, which make learners’ strong intention of long-term commitment to a brand is only created and enhanced by good results or samples of their relatives, their friends, etc Therefore, brand awareness is not an important factor influencing their loyalty However, it is difficult to say that learners’ awareness to a brand is not important in the customer-based ETC brand equity model Further study needs to be undertaken to investigate this problem The findings demonstrated that there is the significant mean difference of brand awareness, perceived quality, brand image, and brand loyalty It implies that learners showed higher all dimensions of customer-based ETC brand equity to high-tuition fee ETCs than they did to the low-tuition fee ETCs However, one of these findings needs to consider carefully That is assurance component included 94 perceived quality dimension of customer-based ETC brand equity was not supported by the data On other words, there was only the significant mean difference among tangibles components between high-tuition fee group and lowtuition fee group, and the tangibles component dominated the perceived quality dimension in making the difference in ETC context 5.4 Contributions of the research findings 5.4.1 Theoretical contribution Researchers have focused on customer-based brand equity with a great attention in the literature on branding However, despite its importance, the role of brand equity in the marketing of services has not been explored in any detail (Krishnan & Hartline 2001) More research has been conducted in the product context than in relation to service context, which has been recognised as a knowledge gap in the research on branding In order to make a contribution to overcoming this gap, this study has focused on the issue of brand equity from the customer’s perspective in service context This study has confirmed support of the theoretical model applied for this study The findings show that brand awareness, perceived quality, brand image and brand loyalty are all subdimensions of customer-based ETC brand equity in service context This study contributes to the complete picture of brand equity in service context It has found that perceived quality is an important dimension of customer-based ETC brand equity, in which it only includes two components: tangibles and assurance, in stead of five components: reliability, responsiveness, tangibles, assurance, and empathy like in the literature The second theoretical contribution of this study is to build the construct measurement scales of customer-based ETC brand equity, by adapting the scales in previous studies Due to the lack of a theory base in education and training 95 marketing, particularly from ETC perspective, this approach becomes useful to adapt the scales of other perspectives to the construct measurement scales of customer-based ETC brand equity using empirical methods This study makes a contribution to the literature by modifying and testing them within the context of a developing country – Vietnam The findings confirmed that most of the instruments adapted from studies conducted in developed countries satisfied the reliability and validity of measures in the developing market, although some items were deleted or reworded to suit the Vietnamese culture The third contribution of this study is that it contributes to filling the gap in branding knowledge related to the effect of the other dimensions of brand equity on brand loyalty in ETC perspective The findings indicate that perceived quality and brand image have a positive and significant effect on brand loyalty Moreover, perceived quality has the higher effect on brand image, in which the assurance component dominated However, the findings also show that brand awareness has no significant effect on brand loyalty in ETC perspective Finally, this study has compared the dimensions of customer-based ETC brand equity and their attributes between high-tuition fee brands and low-tuition fee brands which is considered as the forth contribution of this study The findings indicate that all of four dimensions of customer-based ETC brand equity are significantly different between these two groups in general However, there is only the significant mean difference among tangibles components between high-tuition fee and low-tuition fee groups, and the tangibles component dominates the perceived quality dimension in the ETC context The assurance components included in perceived quality dimension of ETC brand equity between the two groups are not significantly different Comparing the two groups, learners showed higher all dimensions of brand equity to high-tuition fee ETCs than they did to the low-tuition fee ETCs In detail, the attributes underlying dimensions of ETC brand 96 equity have been also investigated in the study This contribution is meaningful for the literature on branding as well as for the executives in ETC industry, hightuition fee ETC brand managers and low-tuition fee ETC brand managers The above discussion has summarised the four main contributions of this study from the theoretical perspective The next section will discuss the methodological contributions of the study, followed by the practical implications of the research in section 5.4 5.4.2 Methodological contribution This study has made a contribution to the literature by modifying and testing construct measurement scales within the context of ETC service using qualitative method through focus group discussion instead of pilot interview survey Doing interview at business entities is really difficult in Vietnam setting due to owners’ disallowance because the owners are afraid of various reasons such as revealing weaknesses, competitors imitating strong features, and other unexpected risks resulting in reducing revenues, market share or fame On the other hand, the entities don’t want their time and their learners to be waste because they don’t find any benefit from the interview In addition, the majority of Vietnamese doesn’t like to show their opinions to a stranger Therefore, choosing focus group discussion of qualitative method as optimal solution in Vietnamese setting, a developing country with a particular Eastern culture may be considered a contribution to the effectiveness of applying qualitative method to marketing research One other of the advantages of focus group discussion in qualitative method is to cost less than the payment for a pilot interview survey Of course, these should be confirmed through further research The following section outlines and discusses the practical implications of the research outcomes from a brand manager’s perspective 97 5.5 Implications of the research Brand loyalty at ETC is a key concern to every brand manager Therefore this study has focused on ETC brand equity and the effect of other dimensions on brand loyalty The results of this study suggested a number of implications for brand managers The study provided some guidance on branding strategies from the learner perspective Firstly, this study provides further evidence to confirm that brand image and perceived quality are significantly and positively related to brand loyalty Strong loyalty is characterised by heightened brand image and perceived quality Moreover, while perceived quality including reliability, tangibles, responsiveness, assurance and empathy components, is commonly viewed as key marketing tools used to build strong brands, this study has shown that perceived quality only including tangibles and assurance and dominated by assurance in perspective of their impact on brand loyalty The contribution of assurance component to ETC brand loyalty is higher than that of brand image dimension This means that brand managers should focus on building strong assurance component with learners to improve their loyalty The study also found that brand awareness doesn’t lead to increased brand loyalty Brand awareness is less important to brand loyalty, compared to other dimensions, in terms of influencing brand loyalty This in part explains why advertising, sale promotion and other forms of promotion not have a strong direct affect on brand loyalty however they improve ETC brand equity In the Vietnamese market, it has been shown that brand managers tend to focus their branding efforts on gaining the loyalty of learners in their brand As a result, they tend to focus more on offering promotions, especially via price promotions, discount price to improve learners’ loyalty However, the results of this study suggest that they should first focus directly on building brand image and perceived quality, mainly assurance 98 component of perceived quality, resulting in hightening not only brand loyalty but also brand equity The measures of ETC brand equity can be used to check the health of a brand from the learner perspective This will identify the strengths and weaknesses of a brand The results of brand health checking will help brand managers to identify what dimensions, what components and what attributes of their branding need to be improved to strengthen the learner’s impression of their service It is the objective of brand managers in setting up marketing plans to build a strong brand in both the short-term and the long-term This contribution is meaningful not only for brand managers but also for marketing research companies wanting to improve the measurement of brand equity from the education and training perspective Moreover, the difference between high-tuition fee brands and low-tuition fee brands in dimensions of ETC brand equity and their attributes has been confirmed The finding of this shows that brand managers of different brand groups must focus on different dimensions of ETC brand equity and their attributes to build their brands This finding draws a new direction for brand managers to build brand strategies in order to survive when increasingly competing against brands In summary, ETC brand equity is not only valuable tool for ETC executives but also for other service industry executives to evaluate their marketing efforts Necessary feedback can be obtained from customers for this evaluation will aid in: identifying service related problems; identifying advertising/positioning problems; and also providing feedback to the staff on where improvements need to be made ETC brand equity scale gives service industry managers a suitable approach for building their branding strategies If managers have limited resources to 99 implement branding strategies, this helps them to prioritize and allocate resources across brand equity dimensions and their attributes 5.6 Limitations of the research and further research The study has some limitations First of all, the study is limited to only ETCs Thus, future research should attempt to examine brand equity across many different education and training categories So the results of this study will be more representative Secondly, an odd finding of this study, based on the empirical results, was that of the components of perceived quality as suggested by Parasuraman et al (1988), reliability, responsiveness, and empathy were found not to be This might show that this five component models of perceived quality is not applicable to the ETCs Further research into this claim would clear this suggestion As for future research, the scale developed here can be used to measure consumer-based brand equity in other education and training sectors, introducing the necessary adaptations 5.7 Conclusion The internal relationship between the individual dimensions of customerbased brand equity and applicability of the suggested customer based brand equity scale on the ETC industry has been examined in this study Our scale comprises 29 variables representing the four dimensions of brand loyalty, brand image, perceived quality, and brand awareness Important practical and theoretical implications that benefit customer based brand equity research in service industry and particularly ETC industry are presented in the study as follows: Firstly, the study contributes to our understanding of customer based brand equity phenomena and its measurement by examining the dimensions of this construct 100 Secondly, customer based brand equity concept is measured by breaking down this construct into the dimensions and the relations between these dimensions are tested, especially between brand loyalty and the other dimensions So the end results give opportunity to managers to develop detailed brand equity strategies for their organizations to build and maintain learners’ loyalty Thirdly, the present study relies on a sample of actual ETC learners with tuition diversity, of which the results may contribute to brand managers of the both high-tuition fee group and low-tuition fee group implications for the ways to create and enhance their sustainable competitive advantages through positioning their brands Fourthly, the study aids ETCs to deeply understand the concept of customer-based brand equity and its dimensions in the context of service in general and training foreign languages in particular, resulting in managers’ profound knowledge in designing of marketing programs for building and broadcasting their brands effectively Fifthly, the results of this research contribute complementarily to the literature on brand equity on the world The research is able to be a reference for researchers, lecturers, and students in marketing and management, in Vietnam and on the world of brand equity as well as the role of loyalty in Vietnam market Finally, the present study could be a reference of research methodology not only in marketing and management in 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Phỏng vấn lúc , ngày / /2009 Phỏng vấn bởi: ... defined customer- based brand equity as the differential effect of brand knowledge on customer response to the marketing of the brand According to this view, the premise of the customer- based brand equity. .. conceptualization of brand equity 26 2.3.2 Keller’s conceptualization of brand equity 28 2.4 The measurement of Customer- Based Brand Equity 30 2.4.1 Brand awareness 31 2.4.2 Brand. .. measurement of Customer- Based Brand Equity Most studies on brand equity focus on customer mindset Particularly, the four dimensions of brand equity including brand loyalty, perceived quality, brand