Model Development Stage Three – The Integrative Framework

As raised in Section 1.3, in spite of its significant role in enabling firms to achieve higher levels of brand equity, brand orientation by itself may not be sufficient if appropriate market-linking and controlling mechanisms are not in place. Indeed, given the importance of enacting consistent branding actions (e.g., Park et al., 1986; Keller, 1993; Erdem & Swait, 1998; Reid et al., 2005; Erdem et al., 2006) and linking with customers through the brand (e.g., Baumgarth, 2010; Hirvonen & Laukkanen, 2014), firms may need to incorporate controlling and market-linking mechanisms with their brand orientation in order to achieve higher levels of brand equity.

Thus, following the theoretical framework captured in Figure 3.1, the third and last stage of model development focuses on the integrated component that involves all constructs considered in both the underlying and moderating processes considered in Sections 3.2.1 and 3.2.2 respectively. In doing so, the integrated component as captured in Figure 3.4 below seeks to address the research gaps and objectives identified in Section 1.3 by shedding light on the underlying process through which the interplay among the firm’s brand orientation and market-linking and controlling mechanisms contributes to higher levels of brand equity. In the following section, emphasis is given to articulate how this process occurs and examine the respective roles of brand orientation and market-linking (brand management capability) and controlling (formalisation, centralisation, departmentalisation and brand-specific TRL) mechanisms.

Figure 3.4: The framework for achieving brand management superiority

Mediating role of brand management capability in the relationship between brand orientation combined with controls and brand equity

Earlier discussions undertaken in Section 1.3 show that the mere possession of brand orientation is an insufficient condition for firms to achieve higher levels of brand equity because firms are also required to be externally relevant and appropriately linked with customers through the brand (Baumgarth, 2010; Hirvonen & Laukkanen, 2014). To this end, discussions undertaken in Section 3.2.1 show that brand management capability plays a critical mediating role because it enables firms to link with customers and serve their needs through the brand by reflecting and reinforcing the idiosyncratic identity and distinctive features of the brand in their minds. Thus, underpinned by the RBV, this study argues that the knowledge base provided by brand orientation is critical to the development of brand management capability which is subsequently drawn upon as the integral means by which brand-oriented firms link with customers and serve their needs through the brand to achieve higher levels of brand equity.

However, as discussed in Section 3.2.2, achieving higher levels of brand equity also requires that firms enact consistent branding actions because some scholars argue that such actions are critical to establishing of a clear and cohesive brand image in the minds of consumers (e.g., Park et al., 1986; Keller, 1993; Erdem & Swait, 1998; Ewing & Napoli, 2005; Reid et al., 2005). Indeed, it is widely acknowledged in the branding literature that when branding elements established by firms are highly congruent with one another, the resultant image is more easily learned and remembered by consumers (Aaker, 1991; Keller, 1993, 2008). In particular, Keller (1993) contends that the shortcomings of a “diffuse” brand image include: (1) the failure on the part of consumers to clearly understand the meaning of the brand because both established and new information related to the brand cannot be strongly linked; (2) susceptibility to competitive actions because of the lack of connection between any one association and other associations in producing a clear meaning; and (3) the possibility of consumers overlooking, discounting or not retrieving some potentially relevant brand associations in making brand decisions when the brand image is not cohesive.

It is not surprising then that previous research finds brands with a clear and cohesive image to perform better than those which do not have such clarity and cohesiveness because consumers are more likely to attribute additional value to and have positive and favourable reactions towards the brand whose image they can clearly decipher and resonate with (e.g., Aaker, 1996; de Chernatony & Segal- Horn, 2003; Ewing & Napoli, 2005; Reid et al., 2005; da Silveira et al., 2013). The contention advanced here can perhaps be appropriately exemplified by the success of Apple whose image clearly resonates with the notions of “slick” and

“innovative” owing to the consistency of its branding actions which is emphasised through its line of uniquely-designed and innovative i-products (e.g., iPhones, iPods, iMacs), its innovative-looking operating systems and software interfaces (e.g., iTunes, iOS, OS X), and the stylish and innovative layout of its distribution outlets (e.g., Apple Store).

Thus, firms need to have in place the appropriate and necessary controlling mechanisms so that consistent branding actions can be enacted to achieve higher levels of brand equity. To this end, the theory of marketing control suggests that structural characteristics and leadership style may be imperative owing to the significant influence they exert on the ways in which employees complete work tasks (e.g., Jaworski, 1988; Jaworski & Kohli, 1993; Auh & Menguc, 2007; Morhart et al., 2009). Having the appropriate structural and leadership controls may therefore be critical to establishing the necessary conditions under which branding actions can be enacted consistently to establish a clear and cohesive image in the minds of consumers and achieve higher levels of brand equity (e.g., Keller, 1993; Erdem & Swait, 1998; Reid et al., 2005).

Specifically, formalisation imposes specific rules and procedures by which employees abide to complete work tasks (Jaworski & Kohli, 1993; Auh & Menguc, 2007). Thus, putting in place a formalised structure to govern the process through which brand-oriented firms develop brand management capability may be conducive to creating the condition fundamental to branding under which customer-linking branding actions can be enacted in a consistent manner. Accordingly, through these actions, brand-oriented firms may be able to establish a clear and cohesive brand image in the minds of consumers and achieve higher

levels of brand equity because prior research suggests that consumers are more likely to ascribe additional value to a brand whose image is clear and decipherable (e.g., Keller, 1993; Aaker, 1996; Erdem & Swait, 1998; Reid et al., 2005). Therefore, it is hypothesised that:

H8a: Brand management capability mediates the interactive effect of brand orientation and formalisation on brand equity.

The same can also be made of centralisation given its capacity to limit the dispersion of decision-making authority and the multiplicity and variety generated thereof (Jaworski & Kohli, 1993; Auh & Menguc, 2007). Having a centralised structure in place to govern the process through which brand-oriented firms develop brand management capability ensures operations are tightly controlled and centrally coordinated. Accordingly, it is argued that brand-oriented firms are able achieve higher levels of brand equity when incorporated with a centralised structure because this combination (brand orientation and centralisation) provides the condition critical to branding that facilitates brand management capability development. The enactment of this brand management capability is the key that contributes to higher levels of brand equity owing to its capacity to establish in the minds of consumers a clear and cohesive brand image that many suggest is critical to eliciting positive brand perception and ascription of additional brand value from consumers (e.g., Keller, 1993; Erdem & Swait, 1998). Therefore, it is hypothesised that:

H8b: Brand management capability mediates the interactive effect of brand orientation and centralisation on brand equity.

The same cannot be said for departmentalisation as the opposite effect may be expected because it restricts interdepartmental interaction, communication and information sharing (Jaworski & Kohli, 1993; Matsuno et al., 2002). A departmentalised structure prevents interdepartmental coordination and inhibits the elicitation of a concerted effort from the firm as a whole. Thus, when departments are not communicating with each other, it may not facilitate brand management capability development because it deprives brand-oriented firms of the condition fundamental to branding under which brand management capability is enacted in a consistent manner. Accordingly, they may be enacting customer- linking branding actions that lack cohesion and integration, resulting in the establishment of a cluttered brand image in the minds of consumers. As a result, consumers may experience difficulty in clearly deciphering the true image of the brand and thus be deterred from viewing the brand in a positive light and ascribing additional value to it (e.g., Keller, 1993; Erdem & Swait, 1998; Reid et al., 2005; Erdem et al., 2006). Therefore, it is hypothesised that:

H8c: Brand management capability mediates the interactive effect of brand orientation and departmentalisation on brand equity.

Given that brand-specific TRL focuses on administering rewards and punishments as a means of ensuring employee behaviour is in line with brand performance standards and expectations (Morhart et al., 2009; Punjaisri et al., 2013), it ensures employee behaviour and ultimately firm actions are properly governed, which establishes a greater sense of uniformity. Having brand-specific TRL in place to govern the process through which brand-oriented firms develop

brand management capability creates the necessary condition under which the associated customer-linking branding actions can be enacted in a consistent manner. Thus, it is expected that brand-specific TRL is critical to helping firms to translate their brand orientation into higher levels of brand equity because this combination (brand orientation and brand-specific TRL) allows firms to enact consistent customer-linking branding actions and establishes in the minds of consumers a clear and cohesive image that facilitates the manner in which the brand is viewed positively and ascribed with additional value (e.g., Keller, 1993; Erdem & Swait, 1998). Therefore, it is hypothesised that:

H8d: Brand management capability mediates the interactive effect of brand orientation and brand-specific TRL on brand equity.