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A Study on Hierarchical Relationship between Brand Equity

Dimensions of Selected FMCG Product

- Mr. A. Karupannan * - Dr. M. Vijayakumar **

Abstract

Branding and brand equity have been the focus of marketing research for many years. Brands play a key role in engaging the consumer and the manufacturer in a long term consumer-brand relationship. Two broad philosophical approaches to defining brand equity exist in marketing literature: financial perspective and consumer perspective. Brand Equity dimensions are brand awareness, perceived quality, brand association, brand image, and brand loyalty, which are most researched and cited in the literature. This paper empirically tests the hierarchical nature of brand equity dimensions in contributing to brand equity for fast moving consumer goods. The study first briefly reviews the literature on brand equity, constructs research model and generate research hypotheses that explains the hierarchical relationship among the brand equity dimensions. It then empirically tests the model and presents the results. On considering the hierarchical relationship, perceived quality and brand associations are found to be the major contributors towards brand equity followed by brand awareness and brand image. Brand loyalty is found to be comparatively less significant in determining brand equity. In the present study, Sensodyne, a toothpaste brand was used to understand and find the effect of brand equity on its dimensions. Population of this study is the FMCG users within the Cochin city. The population size is indefinite. Sample size for this study is 150 consumers. Convenient sampling method is used in the study as the sampling method. The methods used in data analysis are including descriptive analysis, reliability analysis, and multiple regression analysis. It also employees independent sample t-test and ANOVA to find significance of age and gender in determining opinion about brand equity dimensions. Descriptive analysis is used to summarize the characteristic of respondents. Finally, multiple regression analysis is applied to determine whether brand equity dimensions affect on brand equity and interrelationship between brand equity dimensions.

Keywords: Brand image, Perceived quality, Brand associations, Brand loyalty, Brand awareness.

* Assistant Professor, Department of MBA, K.S.Rangasamy College of Technology, Tiruchengode, Tamil Nadu.

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1. Introduction

Branding and brand equity have been the focus of marketing research for many years. Brands play a key role in engaging the consumer and the manufacturer in a long term consumer-brand relationship. The relationship occupies a critical position in consumer’s memory and adds value to the customer, the manufacturer and the trade. There are two broad philosophical approaches to defining brand equity exist in marketing literature: financial perspective and consumer perspective. The former describes brand equity as the value of a brand to the firm (Simon and Sullivan, 1993), while the later represents the value endowed by the brand to the consumer (Aaker, 1991; and Keller, 1998). Several researchers have argued in favour of consumer-based measurement of brand equity. The brand can create a “value to the investor, the manufacturer and the retailer only if there is value for the consumer” (Cobb-Walgren et al., 1995). Various consumer perspective brand equity models have been proposed by marketing academicians, practitioners and consulting firms.

Aaker (1991,) defined brand equity as “a set of brand assets or liabilities linked to a brand , its name and symbol that adds or subtracts from the value provided by a product or service to a firm and/or to that firm’s customers”. Keller (1993) defines brand equity as the differential effect of ‘brand knowledge’ on consumer response to marketing of a brand and emphasizes two constructs namely brand awareness and brand image in building brand equity. Presence of strong, unique and positive associations of a brand is imperative to building strong brands. Brand knowledge is argued to serve as an invaluable contributor to enhancing marketing efficiency in that the knowledge that has been inextricably intertwined with the brand in a customer’s mind significantly influences the consumer information process of a brand (Keller, 1993). Positive cognitive representation of the brand results in long-term customer preference and behaviour and loyalty (Peter and Olson, 2002)

A critical review of brand literature presented various brand equity dimensions. These include perceived quality (Aaker, 1991), brand heuristic (Punj and Hillver, 2004), brand magic (Biel, 1997), brand attributes (de Chernatony and McDonald, 1998), brand association (Aaker, 1991), brand description (Feldwick, 1996), brand image (Keller, 1993), brand personality and many more. For the present study we have chosen that constructed by Aaker (1991) and Keller (1993); brand awareness, perceived quality, brand association, brand image, and brand loyalty as brand equity dimensions, which are most researched and cited in the literature.

Dimensions of Brand Equity

BRAND AWARENESS

PERCEIVED QUALITY

BRAND LOYALTY

BRAND ASSOCIATION

BRAND IMAGE

BRAND EQUITY

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This paper empirically tests the hierarchical nature of brand equity dimensions in contributing to brand equity for fast moving consumer goods. The study first briefly reviews the literature on brand equity, constructs research model and generate research hypotheses that explains the hierarchical relationship among the brand equity dimensions. It then empirically tests the model and presents the results.

2. Objectives of the Study

1. To study about the dimensions of brand equity.

2. To investigate the contribution of the brand equity dimensions of brand awareness, perceived quality, brand association, brand image and brand loyalty towards the brand equity of the product.

3. To assess the interrelationship between brand equity dimensions.

4. To find the major contributor towards brand equity.

5. To identify the methods and process that will facilitate or hinder the scale up of brand equity of selected brand.

3. Hypotheses of the Study

H1: Brand awareness has a significant positive impact on brand equity.

H2: Perceived quality has a significant positive impact on brand equity.

H3: Brand association has a significant positive impact on brand equity.

H4: Brand image has a significant positive impact on brand equity.

H6: Brand Awareness has a significant positive impact on Perceived quality.

H7: Brand Awareness has a significant positive impact on Brand Association.

H8: Brand Awareness has a significant positive impact on Brand Image.

H9: Perceived quality has a significant positive impact on Brand Association. H10: Perceived quality has a significant positive impact on Brand Image.

H11: Perceived quality has a significant positive impact on Brand Loyalty.

H12: Brand Association has a significant positive impact on Brand Image.

H13: Gender of the respondents is significant in determining the opinion towards brand equity dimensions.

H14: Age of the respondents is significant in determining the opinion towards brand equity dimensions.

4. Research Methodology

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various procedures are used. This study mainly depends on primary data though secondary data is also used to some extent. Primary data is collected through direct interviews and questionnaires. In the present study, Sensodyne, a toothpaste brand was used to understand and find the effect of brand equity on its dimensions. Population of this study is the FMCG users within the Cochin city. Sample size for this study is 150 consumers. Convenient sampling method is used in the study as the sampling method.

The methods used in data analysis are including descriptive analysis, reliability analysis, and multiple regression analysis. It also employees independent sample t-test and ANOVA to find significance of age and gender in determining opinion about brand equity dimensions. Descriptive analysis is used to summarize the characteristic of respondents. Finally, multiple regression analysis is applied to determine whether brand equity dimensions affect on brand equity and interrelationship between brand equity dimensions.

5. Results and Discussion

Table1 : Distribution of Respondents by their demographic & Economic Factors

S.No Particulars Respondents Percentage 1. Age

15-25 44 29.3

26-35 72 48.0

36-45 14 9.3

46-55 12 8.0

56-65 8 5.3

Total 150 100

2. Gender

Male 64 42.7

Female 86 57.3

Total 150 100.0

3. Education

Up to Plus two 20 13.3

Graduate 44 29.3

Post graduate 28 18.7

Professional degree 50 33.3

Others 8 5.3

Total 150 100

4. Monthly Income

Below 10000 16 10.7

10000-20000 48 32.0

20001-50000 62 41.3

Above 50000 24 16.0

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The Table: 1 reveals that 48% of the respondents were between the age of 26-35 years. 81.3% of respondents are having formal education and 57.3% of the repondents of the survey were females. And it is understood that 41.3% of respondents are having a monthly income between Rs.20000-50000.

Reliability Analysis

In this section, it is investigated whether all the factors are reliable. Reliability analysis can be test the homogeneity or cohesion of the items that comprise each scale and the reliability coefficients as Cronbach Alpha coefficients is reflects the average correlation among the items that constitute a scale (Ntoumanis, 2001; Marinova et al, 2011). A reliability coefficient of 0.70 or higher is considered “acceptable” in most social science research situations (Nunnally, 1978).

In this study, almost all of the variables are over 0.70, the variables of brand awareness and perceived quality reach the very higher score, which Cronbach Alpha coefficients are 0.932 and .884 respectively. Beside, brand association and brand image are also high which are 0.822 and 0.835.

Brand loyalty is the lowest reliable variable compare with other variable, which the Cronbachs Alpha = 0.51700.70 and hence it considered less acceptable compared to others. To sum up, almost all the constructs have confirmed as reliable variables that can be taken into the further analysis.

Multiple Regression Analysis (Structural Model and Hypothesis Testing)

Regression analysis in this study is used to determine whether the independent variables explain a will be significant variations in the dependent variable and whether a relationship exists (Malhotra and Birks, 2005). If pd ” 0.05, that means the hypothesis is supported and can be used to make predictions, however, if P >0.05, it means the hypothesis is rejected.

Moreover, the explanatory power (R2) is used to for determine the value of explaining for the

research. The value of R2 below 0.2 is considered weak explaining, between 0.2 and 0.6 is moderate

explaining, and above 0.6 is considered strong power for explaining.

Analysis of the Relationship between Brand Eequity and Dimensions of Brand Equity

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Table: 2 Model Summary: Brand Equity and Its Five Dimensions

Model Summary

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 .875a .765 .757 1.53788

a. Predictors: (Constant), Brand image, Perceived Quality, Brand Association, Brand Awareness, Brand Loyalty

From the Model Summary (Table 2), the five independent variables that constitute the brand equity of coefficient of determination R2 (R Square) is 0.765 > 0.6, which implies a strong explanatory

power.

Table 3 : The Coefficients of Brand Equity and its Five Dimensions

Coefficients

Model

Unstandardized Coefficients Standardized

Coefficients t Sig.

B Std. Error Beta

(Constant) .601 1.007 .597 .551

Brand Awareness .116 .089 .148 4.309 .003 Perceived Quality .519 .139 .421 3.739 .000

Brand Loyalty .007 .099 .008 1.069 .045

Brand Association .572 .128 .406 4.475 .000

Brand image .427 .131 .275 3.271 .001

a. Dependent Variable: Brand Equity

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Brand equity is given by the model:

Brand equity = 0.601 + 0.116 brand awareness + 0.519 perceived quality+ 0.007 brand loyalty + 0.572 brand association + 0.472 brand image

This model is significant and explains about 76% of variation in brand equity.

Analysis of Interrelationship between Brand Equity dimensions

Table 4 : Model summary: Brand Awareness on Perceived Quality

Model Summary

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 .829a .688 .686 1.419

a. Predictors: (Constant), Brand Awareness

From the Model Summary (Table 4), R2 (R Square) is 0.688 > 0.6, which implies a strong

explanatory power.

Table 5 : The Coefficients of Perceived Quality and Brand Awareness

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta

1 (Constant) 2.687 .344 7.813 .000

Brand Awareness .526 .029 .829 18.050 .000 a. Dependent Variable: Perceived Quality

As hypothesized in literature review, brand awareness is having a significant positive effect on perceived quality (H6) as 0.000<0.05 which shows high significance.

Table 6 : Model Summary : Brand Awareness on Brand Association

Model Summary

Model R Square R R Square Adjusted Std. Error of the Estimate

1 .864a .746 .745 1.120 a. Predictors: (Constant), Brand Awareness

From the Model Summary (Table 6), R2 (R Square) is 0.746 > 0.6, which implies a strong

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Table: 7 The coefficients of Brand Association and Brand Awareness

Coefficien ts

Mod el

Unstan dard iz ed Coefficien ts

Stand ardize d Coefficients

t S ig. B Std. Er ror Be ta

1 (Constan t) 6 .075 .272 22 .367 .00 0

Brand Awareness .481 .023 .864 20 .875 .00 0

a. Dependent Variab le: Bran d Association

As hypothesized in literature review, brand awareness is having a significant positive effect on brand association (H7) as 0.000<0.05 which shows high significance.

Table 8 : Model summary: Brand Awareness on Brand Image

Model Summary

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 .856a .733 .731 1.041

a. Predictors: (Constant), Brand Awareness

From the Model Summary (Table 8), R2 (R Square) is 0.733 > 0.6, which implies a strong

explanatory power.

Table: 9 The coefficients of Brand Image and Brand Awareness

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig. B Std. Error Beta

1 (Constant) 3.753 .252 14.867 .000

Brand Awareness .432 .021 .856 20.165 .000 a. Dependent Variable: Brand image

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Table 10 : Model summary: Perceived Quality on Brand Awareness

Model Summary

Model R R

Square

Adjusted R Square

Std. Error of the Estimate

1 .829a .688 .686 2.235

a. Predictors: (Constant), Perceived Quality

From the Model Summary (table 10), R2 (R Square) is 0.688 > 0.6, which implies a strong

explanatory power.

Table 11 : The coefficients of Brand Awareness and Perceived Quality

Coefficients

Model

Unstan dardized Coefficien ts

Standardized Coefficients

t Sig.

B Std. Error Beta

1 (Constant) -.042 .644 -.065 .949

Perceived Quality 1.306 .072 .829 18.050 .000

a. Dependent Variable: Brand Awareness

As hypothesized in literature review, perceived quality is having a significant positive effect on brand awareness (H9) as 0.000<0.05 which shows high significance.

Table 12 : Model summary : Perceived Quality on Brand Image

Model Summary

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 .769a .592 .589 1.288

a. Predictors: (Constant), Perceived Quality

From the Model Summary (table 12), R2 (R Square) is 0.592 < 0.6<0.2, which implies a

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Table 13 : The coefficients of Brand Image and Perceived Quality

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig. B Std. Error Beta

1 (Constant) 3.335 .371 8.984 .000

Perceived Quality .611 .042 .769 14.641 .000

a. Dependent Variable: Brand image

As hypothesized in literature review, perceived quality is having a significant positive effect on brand image (H10) as 0.000<0.05 which shows high significance.

Table 14 : Model summary: Perceived Quality on Brand Loyalty

Model Summary

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 .912a .832 .831 1.565

a. Predictors: (Constant), Perceived Quality

From the Model Summary (Table 14), R2 (R Square) is 0.832 > 0.6, which implies a strong

explanatory power.

Table: 15 The coefficients of Brand Loyalty and Perceived Quality

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig. B Std. Error Beta

1 (Constant) -.685 .451 -1.519 .131

Perceived Quality 1.371 .051 .912 27.054 .000

a. Dependent Variable: Brand Loyalty

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Table 16 : Model summary: Brand Association on Brand Image

Model Summary

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 .793a .629 .626 1.228

a. Predictors: (Constant), Brand Association

From the Model Summary (table 16), R2 (R Square) is 0.629 > 0.6, which implies a strong

explanatory power.

Table: 17 The coefficients of Brand Association and Brand Image

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta

1

(Constant) .348 .528 .659 .511

Brand Association .718 .045 .793 15.829 .000

a. Dependent Variable: Brand image

As hypothesized in literature review, brand association is having a significant positive effect on brand image (H12) as 0.000<0.05 which shows high significance.

Hypothesis Testing

Significance of gender in determining Brand Equity dimensions

Table 18 : Result of t-test: significance of gender in determining brand equity dimensions

S.No Factor t-value significance Interpretation 1. Brand awareness .048 .473 Not significant 2. Perceived quality .904 .285 Not significant 3. Brand loyalty 1.622 .021 Significant

4 Brand association .859 .017 Significant 5. Brand image .247 .264 Not significant

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Table: 19 Result of ANOVA: significance of age in determining Brand Equity dimensions

ANOVA

Sum of Squares df Mean Square F Sig.

Brand Awareness

Between Groups 658.789 4 164.697 13.986 .000

Within Groups 1707.504 145 11.776

Total 953.333 149

Perceived Quality

Between Groups 134.400 4 33.600 5.949 .000

Within Groups 818.934 145 5.648

Total 953.333 149

Brand Loyalty

Between Groups 316.953 4 79.238 6.254 .000

Within Groups 1837.020 145 12.669

Total 2153.973 149

Brand Association

Between Groups 200.864 4 50.216 13.699 .000

Within Groups 531.509 145 3.666

Total 732.373 149

Brand image

Between Groups 120.690 4 30.172 9.105 .000

Within Groups 480.483 145 3.314

Total 601.173 149

Table 19 : shows that age is highly significant in determining the opinion towards brand equity dimensions of brand awareness, perceived quality, brand loyalty, brand association and brand image.

6. Findings of the Study

1. 57.3% of the respondents of the study were females.

2. 48% of the respondents were aged between 26-35 showing the increased importance of concentrating on youth, even in FMCG sector.

3. Among the respondents, 33.3% were professional degree holders and 29.3% were graduates.

4. 41.3% of the respondents are having a monthly income between 20000 and 50000/-.

5. 30.7% of respondents strongly agree that they are aware of sensodyne and 28% agrees to it. 26.7% has a neutral opinion.

6. 66.3% of respondents agree that they trust the company (GSK) which owns sensodyne.

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8. Brand equity = 0.601+0.116 brand awareness+0.519 perceived quality + 0.007 brand loyalty + 0.572 brand association+0.472 brand image

9. This model is significant and explains about 76% of variation in brand equity

10. Regression analysis of the data collected shows that the five independent variables that constitute the brand equity – brand awareness, perceived quality, brand loyalty, brand association and brand image - possess high explanatory power with a high R2 value.

11. Perceived quality and brand associations are highly significant positive impact on brand equity of the selected FMCG product.

12. Brand awareness and brand image is having significant positive impact on brand equity of selected FMCG product.

13. Brand loyalty is having marginally significant positive impact on brand equity of selected FMCG product.

14. The hierarchical way in which brand equity dimensions contribute to brand equity of selected FMCG product is perceived quality>brand association>brand image> brand awareness> brand loyalty.

15. On considering the hierarchical relationship, perceived quality and brand associations are found to be the major contributors towards brand equity followed by brand awareness and brand image. Brand loyalty is found to be comparatively less significant in determining brand equity.

16. Study shows that brand awareness has a highly significant positive impact on perceived quality.

17. This study shows that brand awareness has a highly significant positive impact on brand association.

18. This study shows that brand awareness has a highly significant positive impact on brand image.

19. This study shows that perceived quality has a highly significant positive impact on brand awareness.

20. This study shows that perceived quality has a highly significant positive impact on brand image.

21. This study shows that perceived quality has a highly significant positive impact on brand loyalty.

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23. In this study, gender of the respondents is found to be an important factor in determining opinion towards brand loyalty and brand association.

24. In this study the age of the respondents is an important factor in determining opinion towards all the brand equity dimensions.

7. Suggestions and Recommendations

1. Marketers or brand managers should put their efforts on perceived quality and brand associations since both dimensions have high significance in brand equity building.

2. Brand association is the contribution of trustworthiness, image and goodwill of the owner company. So the company should concentrate on improving its image and goodwill.

3. Creating an awareness of the product among customers is the stepping stone towards strong brand equity.

4. More the awareness and ability to recall and recognize a brand, more the brand equity. So the marketers should concentrate on creating brand familiarity.

5. Quality is important aspect to be considered to improve brand equity. Firms should ensure best quality for their brands to create brand equity.

6. Actions should be taken to improve perceived quality of the brand.

7. High perceived quality enable consumers to recognize the differentiation and superiority of a brand, as well as to select the brand.

8. Loyalty programs will be highly beneficial in creating and strengthening brand equity as brand loyalty is a major contributor.

9. Competition is huge in FMCG field. So managers and marketers should work to create uniqueness in their brand which helps in attracting customers.

10. The effective promotional activities such as advertising, word of mouth, sales promotion, store image and event sponsorship that would be help in building high perceived quality and loyalty for a brand should be followed.

8. Conclusion

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improve brand equity. Firms should ensure best quality for their brands to create brand equity. The effective promotional activities such as advertising, word of mouth, sales promotion, store image and event sponsorship that would be help in building high perceived quality and loyalty for a brand can be followed.

References

1. Aaker, D. A. (1991), Managing Brand Equity, The Free Press, New York.

2. Alexander L. Biel (1997), “Discovering brand magic: the hardness of the softer side of branding, International” Journal of Advertising 16(3): 199-210.

3. Cobb-Walgren CJ, Beal C, Donthu N. (1995), “Brand equity, brand preference, and purchase intent”, J Advertising; 24(3): 25 -40.

4. Erenkol, A, D. and Duygun, A. (2010), “Customers perceived brand equity and a research on the customers of Bellona which is a Turkish furniture brand”, The Journal of American Academy of Business, 16,(1): 34-42.

5. Keller, K.L. (1993), “Conceptualizing, measuring and managing customer- based brand equity”, Journal of Marketing, 57(1): 1-22.

6. Keller, K.L. (2002), Strategic brand management: building, measuring, and Management brand equity, 2nd ed., Pearson Education, Upper Saddle River, NJ.

7. Malhotra, N.K. and Birks, D.F. (2006) “Marketing research: An applied Approach”, Updated 2nd European edition. FT Prentice Hall, Financial times.

8. Paul Feldwick (1996), “What is brand equity anyway, and how do you measure it?”, Arket Research Society, 38(2): 85-104.

9. Marinova, S., Cui, J., Marinov, M., and Shiu, E. (2011), “Customers relationship and brand

equity: A study of bank retailing in China”, WBC, poznau, 6-9.

10. Xiao Tong and JM Hawley, (2009), “Measuring customer-based brand equity: empirical evidence from the sportswear market in China”, Journal of Product and Brand Management, 18(4): 262 – 271.

11.

Yoo,B., Donthu, N., and Lee, S., (2000), “An Examination of Selected Marketing Mix

Elements and Brand Equity”,

Journal of the Academy of Marketing Science,

28 (2):

Figure

Table: 2 Model Summary: Brand Equity and Its Five Dimensions
Table 4 : Model summary: Brand Awareness on Perceived Quality
Table: 7 The coefficients of Brand Association and Brand Awareness
Table 10 : Model summary: Perceived Quality on Brand Awareness
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References

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