(Luận văn) the effects of marketing communication on brand equity

MINISTRY OF EDUCATION TRAINING
UNIVERSITY OF ECONOMICS HO CHI MINH CITY
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HUỲNH KIM PHỤNG

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THE EFFECTS OF MARKETING
COMMUNICATON ON BRAND
EQUITY
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Major: Business Administration

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Major Code: 60.34.05

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Supervior: Dr. TRẦN HÀ MINH QUÂN

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Ho Chi Minh City - 2011


TABLE OF CONTENT

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ACKNOWLEDGEMENTS……………………………………………………….1

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ABSTRACT………………………………………………………………………..2

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BACKGROUND…………………………………………….3

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CHAPTER 1.

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Introduction…………………………………………………………………3

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1.1.

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Research Objectives………………………………………………………...4

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1.2.

Research methodology and scope…………………………………………..4

1.4.

Managerial implications……………………………………………………5

1.5.

Structure of the research report……………………………………………..5

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LITERATURE REVIEW AND RESEARCH MODEL….7

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CHAPTER 2.

Introduction…………………………………………………………………7

2.2.

Brand equity…………………………………………………………………7

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2.1.

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2.2.1. Brand awareness……………………………………………………...7

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2.2.2. Perceived quality……………………………………………………..8

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2.2.3. Brand loyalty…………………………………………………………8

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2.2.4. Brand Association……………………………………………………8
The elements of marketing communication…………………………………9

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2.3.

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2.3.1. Advertising Spending……………………………………………….10

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Research Model…………………………………………………………….12

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2.4.

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2.3.3. Sales Promotion…………………………………………………….11

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2.3.2. Field Support Activities…………………………………………….11


2.5.

Summary…………………………………………………………………...13

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CHAPTER 3.

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3.2.

RESEARCH METHODOLOGY…………………………15

Introduction………………………………………………………………..15
Research design……………………………………………………………15

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3.2.1. Research methodology……………………………………………...15

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3.2.2. Research process……………………………………………………17

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3.2.3. Questionnaire Structure……………………………………………..18

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Measurement scale development…………………………………………..19

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3.3.

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3.3.1. Measurements of brand awareness…………………………………19

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3.3.2. Measurements of perceived quality………………………………...20

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3.3.3. Measurements of brand loyalty…………………………………….20

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3.3.4. Measurements of attitudes toward advertising spending…………..21

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3.3.5. Measurements of attitudes toward field support activities………...21

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3.3.6. Measurements of attitudes toward sales promotion………………..22

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3.4.

Field work………………………………………………………………….23

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3.4.1. Researched brands………………………………………………….23

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3.4.2. Sample……………………………………………………………...23
Summary…………………………………………………………………..24

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3.5.

RESEARCH RESULTS…………………………………...28

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CHAPTER 4.
4.1.

Introduction………………………………………………………………..28


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4.2.

Sample Characteristics…………………………………………………….28

4.3.

Measure reliability check………………………………………………….28

4.4.

Exploratory factor analysis (EFA)…………………………………………31

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4.5.

Examination research model by multiple regression………………………36

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4.5.1. Examination the effects of advertising spending, field support

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activities and sales promotion on brand awareness……………………………….36

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4.5.2. Examination the effects of advertising spending, field support

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activities and sales promotion on perceived quality………………………………37

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4.5.3. Examination the effects of advertising spending, filed support

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activities and sales promotion on brand loyalty…………………………………..39

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Summary…………………………………………………………………...41

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DISCUSSION AND CONCLUSION……………………..43

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CHAPTER 5.

Introduction………………………………………………………………..43

5.2.

Marketing communication elements and building brand equity………….43

5.3.

Limitation and future research…………………………………………….45

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APPENDIX

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REFERENCES ………………………………………………………………….46

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TABLE

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Table 3.1: Research progression…………………………………………………..16

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marketing communication and brand equity………………………………………13

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Table 2.1: Structural model – Relationship between some key elements of


Table 3.2: Research process……………………………………………………….17

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Table 3.3: Measurement scales for brand awareness……………………………..19

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Table 3.4: Measurement scales for perceived quality……………………………..20

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Table 3.5: Measurement scales for brand loyalty…………………………………20

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Table 3.6: Measurement scales for attitudes toward advertising spending……….21

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Table 3.7: Measurement scales for attitudes toward field support activities……..22

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Table 3.8: Measurement scales for attitudes toward sales promotion……………..22

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Table 4.1: Sample Characteristics…………………………………………………28

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Table 4.2: Cronbach’s Alpha coefficient for the used measurement scales……….30

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Table 4.3: Total Variance Explained – elements of marketing communication…..32

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4.4:

Rotated

Component

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Matrix(a)

elements

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marketing

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communication…………………………………………………………………….33

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Table 4.5: Total Variance Explained – elements of brand equity…………………33

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Table 4.6: Rotated Component Matrix(a) – elements of brand equity…………….34

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Table 4.7: New Variables Computed……………………………………………...35
Model

Summary

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Marketing

Communication

and

Brand

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Table

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Awareness…………………………………………………………………………37

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Table 4.9: ANOVA (b) – Marketing Communication and Brand Awareness……37

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4.10:

Coefficients

(a)

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Brand

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Table

Quality……………………………………………………………………………..39

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Table 4.11: Model Summary – Marketing Communication and Perceived

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Awareness…………………………………………………………………………37


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4.12:

ANOVA

(b)

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Perceived

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Quality……………………………………………………………………………..39

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Table 4.13: Coefficients (a) – Marketing Communication and Perceived

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Quality……………………………………………………………………………..39

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Table 4.14: Model Summary – Marketing Communication and Brand

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Loyalty……………………………………………………………………………..41

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Table 4.15: ANOVA (b) – Marketing Communication and Brand Loyalty………41

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Table

Coefficients

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(a)

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Brand

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Loyalty……………………………………………………………………………..41

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Table 4.17: Hypothesis and research results………………………………………42

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ACKNOWLEDGMENTS

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The author would like to thank Dr Tran Ha Minh Quan for his instructions and

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valuable comments during the research. I also would like to thank Mr Dang Huu

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Phuc who gave meaningful advice for processing data.

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ABSTRACT

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The objective of this paper is to investigate the relationship between selected

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elements of marketing communication and brand equity of in the body lotion

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category. The selected set includes three key elements from each of marketing

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factors. They are advertising spending, field support activities and sales promotion

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from communication. Plus, awareness, perceived quality and brand loyalty are from

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brand equity. With the concrete measurement, the study surveys body lotion users

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in HCMC. The results show that to selected component of brand equity of body

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lotion category, advertising spending and field support activities response a positive

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side, whereas sales promotion have a negative impact.

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These findings provide insights for doing strategy of marketing communication

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activities generating and managing brand equity.

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CHAPTER 1. BACKGROUND

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1.1.

Introduction

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Brand equity is very important as it is a source of sustainable competitive

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advantages of a brand. The brand owning strong equity increases a chance for the

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brand to be selected, purchased more frequently and so the loyalty to the brand is

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higher, Pitta and Katsanis (1995).

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Moreover, brand equity has strong relationship with marketing communication.

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From various study, importance of brand equity are witnessed

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According to Rajh 2005, brand equity is very important because it has many

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benefits for companies. Bharadwaj et al., (1993) and Hoffman (2000) find that

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brand equity could be considered as a source of sustainable competitive advantage

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while Pitta and Katsanis (1995) discover that there is the positive relationship

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between brand equity and brand loyalty. It means that the brand owning strong

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equity increases a chance for the brand to be selected, purchased more frequently

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and so the loyalty to the brand is higher. Aaker and Keller (1990) also find other

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benefits related to brand extension such as strong brand equity of the brand

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enhances possibility of brand extension to other product categories. It allows

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categories.

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companies to use established brand name to drive consumers to enter new product

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In relation to marketing mix, various studies (Barwise, 1993; Farquhar et al., 1991;

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Keller, 1993; Keller, 1998; Pitta and Katsanis, 1995; Simon and Sullivan, 1993;

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Smith and Park, 1992; Yoo et al., 2000) find that brand equity is one of the sources

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to increase efficiency of marketing communication programs. Brand equity also

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elasticity of consumers to price increases. Brand equity has positive relationship

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brand equity increases elasticity of consumers to price reductions and decreases

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Brand equity also impact elasticity of consumers to price change. More precisely,

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increases willingness of consumers to pay premium price for a specific brand.


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with willingness of stores (distribution channel) to collaborate and provide support

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for the brand. Brand equity reduces the company vulnerability to marketing

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activities of the competition and their vulnerability to crises.

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Although of understanding importance of brand equity, managers have not invested

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in creation brand equity properly in the body lotion category which is growing in

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Vietnam market.Top two giant advertisers Unilever and Beiersdorf are competing

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in advertising spending, sales promotion, etc. However, they have not hadany

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research to investigate the relationship between elements of marketing

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communication and brand equity for this category. In the last two years, the

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managers have frequently used sales promotion to improve their sales performance

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in the short-term. They may ignore to analysis whether sales promotion can

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deteriorate brand equity in the long-term. In addition, they don’t have clear

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communication strategy to enhance brand equity. Therefore, it’s necessary to

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dimensions of brand equity.

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explore the relationship between elements of marketing communication and

Research objectives

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1.2.

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The purpose of this research is to explore impacts of factors of marketing

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communication on brand equity’s elements. This has been one of hottest topics in

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management today in Vietnam emerging market where building brand equity plays

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an important role for giant advertisers’ communication strategy.The research also

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and brand equity

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Research methodology and scope

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provides a starting point for further research on relationship between marketing mix

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biggest sales contribution, up to 80% of sales on each key brand (Source AC

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The research is conducted in the dynamic market, HCMC in which there is the

Nielsen Market Retail Audit 2010)


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Key brands are defined as brands with satisfying one of following criteria:

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 The brand is the market leading in the body lotion category or

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 The brands have long heritage in Vietnam market and have influence on the

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market or

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 The brand have been active in marketing activities like adverting, promotion,

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etc or

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 The brands that have high chance of consideration when making buying

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decision

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This study is conducted by two steps: (1) qualitative study and (2) quantitative

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study.

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Qualitative study is conducted through analyzing secondary data and in-depth

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interview with some current users and brand managers in cosmetic companies. This

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fine tune the measurement scales.

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step helps to (1) confirm key drivers of marketing communications (2) adjust and

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Quantitative study is conducted through face-to-face interview at consumers’

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houses. The second step p is to (1) re-confirm the components and the measurement

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scales and (2) test the research model. Cronbach’s alpha, Exploratory Factor

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Analysis (EFA) and multiple regression methods are used to analyze collected data

Managerial implications

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in this step

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Findings of the research will help managers have in-depth understanding about

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effective marketing communication strategy

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decrease brand equity of the body lotion market. Hence, brand managers can design

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elements of marketing communication and role of each element to increase or

1.5.

Structure of the research report


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This paper comprises five chapters. Chapter 1 introduces the background of the

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study. Chapter 2 presents the literature review on brand, brand equity and the

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research model and hypotheses. Chapter 3 explains research methodology and

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measurement scales. Chapter 4 presents data analysis process and results of the

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study. Chapter 5 summarizes the key findings, discussion, managerial implications,

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limitations of the research and recommendations for future research.

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CHAPTER 2. LITERATURE REVIEW AND RESEARCH MODEL

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2.1.

Introduction

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This chapter reviews literature to establish a theoretical framework for the research.

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The concept of brand equity and common elements of marketing communication

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are presented in the part. The research model is developed to investigate the

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relationship between elements of marketing communication and factors of brand

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equity. Hence, it helps marketing managers to design marketing strategies more

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Brand equity

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effectively

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Brand equity is defined as a set of assets and liabilities linked to the brand, which

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add value to or subtract value from a product in its relationship with customers.

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According to the proposal formulated by Aaker (1991, 1996) brand equity is a

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multidimensional concept. It comprises of perceived quality, brand awareness,

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brand loyalty, brand associations, and other proprietary assets. Other researchers

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also share these dimensions as Aaker. For example, Shocker and Weitz (1998)

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suggest brand loyalty and brand association, Keller (1993) recommends brand

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knowledge, including brand awareness and brand image. And Lasscar et al., (1995)

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suggest five elements of brand equity (1) perceived quality, (2) perceived value, (3)

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brand image, (4) trustworthiness, and (5) commitment to the brand.

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2.2.1. Brand awareness

It relates to the strength of the brand node or trace in memory, as reflected by

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consumer’s ability to identify the brand under different conditions (Rossiter and

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brand as having been seen or heard previously. Brand recall requires that

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performance. Brand recognition requires that consumers correctly discriminate the

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Percy 1987). Brand awareness includes brand recognition and brand recall

consumers correctly generate the brand from the memory.


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2.2.2. Perceived Quality

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Zeithaml (1988) defines perceived quality as “the consumer’s [subjective]

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judgment about a product’s overall excellence or superiority” (p.3). These

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judgments may be influenced by personal product experiences, unique needs and

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consumption situations. High perceived quality indicates that consumers recognize

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the differentiation and superiority of the brand through the long-term experience

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related to the brand. Zeithaml also identifies perceived quality as a component of

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brand value; hence, high perceived quality would drive a consumer to choose the

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brand rather than other competing brands. Therefore, to the degree that brand

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quality is perceived by consumers, brand equity will increase.

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2.2.3. Brand Loyalty

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Oliver (1997) defines brand loyalty as “a deep held commitment to rebuy or

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repatronize a preferred product or service consistently in the future, despite

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situational influences and marketing efforts having the potential to cause switching

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behavior” (p.392). Brand loyalty makes consumers purchase a brand routinely and

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resist switching to another brand. Therefore, to extend that consumers are loyal to

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the brand, brand equity will increase

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2.2.4. Brand Association

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Aaker (1991) defines brand associations as “anything linked in memory to a brand”

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and brand image as “a set of [brand] associations, usually in some meaningful way”
(p.109). Brand association which result in high brand awareness, are positively

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related to brand equity because they can be a signal of quality and commitment and

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comparison with consumer market, the body lotion brands have high level of

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Considering Vietnamese consumers behaviors with female target group – in

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favorable behavior for the brand.

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they help a consumer consider a brand at the point of purchase, which leads to

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branding, similar buying process and consumption of product. With all those

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reasons mentioned, we recognize three common components of brand equity: (1)

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brand awareness, (2) perceived quality and (3) brand loyalty. High brand equity can

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help to explain that consumers can know about the brand, recognize the brand from

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other brands perceive high quality and loyal to the brand in the body lotion

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category

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In theresearch scope, this study will not investigate how each component of brand

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equity increase brand equity. Yoo et al (2000) and other researchers find that brand

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name, brand loyalty, perceived quality, and brand awareness/associations are

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positively related to brand equity.

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Many researchers suggest that brand equity is a strategic aspect of marketing

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management and can be created, maintained and intensified by strengthening on of

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it components (Leuthesser, 1998, Farquhar, 1989, Nomem, 1996). Elements of

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marketing communication have impact on brand equity

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This study focuses on exploring how marketing communication increase or

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decrease brand equity. Hence, the following part of this chapter concentrates on

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theoretical framework on marketing communication
The elements of marketing communication

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Learning from previous qualitative researches in Beierdoft company, there are three

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main key components of the marketing communication which have frequently been
used by almost big cosmetic companies in Vietnam in order to build brand equity:

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(1) advertising spending; (2) field support activities; and (3) sales promotion.

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represent the most often used marketing actions. Thus, it’s enough to express

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do not cover the full marketing activities of cosmetic companies in Vietnam they

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Therefore, this research concentrates on these elements. Although these variables

relationship between factors of marketing communication and elements of brand
equity. Knowing how certain marketing activities increase or decrease brand equity


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will enable marketing managers to develop effective marketing program. Managers

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need to promote brand-building activities and decrease or avoid brand-hurting

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activities (Yoo et al., 2000)

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2.3.1. Advertising Spending

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Advertising by definition is any paid form of non-personal communication of ideas

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or products on both traditional media (TV, Press, Radio, Cinema, Out-of-home)

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and non-traditional media (Internet). Jobber (2001) and some studies (Maxwell,

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Chay and Tellis, Simon and Sullivan, Boulding et al.) indicates that advertising

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spending is good for building brand awareness because it can aim at a mass

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audience quickly, repetition of advertising means that a brand positioning concept

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can be effectively communicated, advertising also can be used to aid the sales effort

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through legitimizing a company and its products, however, advertising is

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impersonal and has limited capability to close the sale.

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The positive effect of advertising spending on brand equity was found in the

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research of Simon and Sullvian (1993). The dollar amount spent on advertising has

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positive effects on brand equity and its components (Cobb-Walgren et al., 1995).

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In Vietnam market, two giant companies Unilever Vietnam and P &G have heavily

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invested in advertising spending in the past ten years.Thousands of million USD

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has been poured into advertising to build up their brands in the emerging market

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key drivers of building up brand equity effectively in Vietnam

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(Source Kantar Media, 2010). This also proves that advertising spending is one of

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Yoo et al. (2000) find the positive relationship between advertising spending and

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the brand. Therefore,

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brand loyalty because it reinforces brand-related associations and attitudes toward

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brand loyalty. Shimp (1997) find that the advertising spending positively related to

 H1: Advertising spending positively affects brand awareness


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 H2: Advertising spending positively affects brand loyalty

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H3: Advertising spending positively affects perceived quality of the brand.

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2.3.2. Field support activities

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Field support activities are efforts to provide face-to-face technical supports to

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consumers by cosmetic firms through market visit, meeting scheme, with the

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intention of making a sale. Since these activities are personal contacts, question can

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be answered and objective overcome, relationships can be built because of its

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personal nature. This two-way communication will help sales forces to identify

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consumers on premises and design better messages in communication. Sales

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materials can help sales persons to explain about products of benefits and create

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atmosphere at shops effectively. Hence, they also contribute to create brand

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awareness and raise the perceived quality, and finally consumers could apply the

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product properly to get good result and become loyal to the brand. Thus, we can

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Therefore,

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assume that field support activities have a good impact on aspects of brand equity.

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 H4: Field support activities conducted for the brand positively affects brand

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awareness

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loyalty

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 H5: Field support activities conducted for the brand positively affects brand

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2.3.3. Sales promotion

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perceived quality of the brand.

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 H6: Field support activities conducted for the brand positively affects

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to Jobber (2001), incentives help to push sales in the short term quickly; however, it

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trade that are designed to stimulate purchase of the identified products. According

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Sales promotion by definition is an effort to provide incentives to consumers and/or

may harm brand equity if marketing Managers use some incentives excessively,
especially money off. Beyond this, these incentives can be easily copied and


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counteracted by competitors (Aaker, 1991). Regular sales promotion would

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communicate low-quality brand image in the long term. Furthermore, Shimp, 1997

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believe that sales promotion do not prolong enough to generate brand association in

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the long-term comparing with other efforts. In addition, consumers may confuse

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about the correct price. The gap between expected and observed prices may

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question about the brand quality. The consumers can perceive brands as poor

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quality. This may unfavorably influence on consumer brand choice decisions. Also,

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sales promotion may cause switching brands among users because they are

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appealed by the benefits provided by sales promotion. When the sales promotion

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ends, they will lose interests in the brand and switch another brand. Yoo et al.

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(2000) suggest that manager should focus on advertising spending to develop brand

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equity instead of offering price promotion.The following hypotheses are proposed:

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establish

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 H7: Sales promotion negatively affects brand awareness.

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 H8: Sales promotion negatively affects brand loyalty.

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 H9: Sales promotion negatively affects perceived quality of the brand.

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Research model

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2.4.

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The main goal of the research is to explore the relationship between some key

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elements of the marketing communication and the components of brand equity. The

efforts

and

brand

equity.

The

elements

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communication

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above literature review indicates the direct relationship between marketing

simplified research model is summarized in Table 2.1.

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communication and components of brand equity are grouped separately. The

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Table 2.1: Structural model – Relationship between some key elements of
marketing communication and brand equity

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hi
ep

H1(+)

do

Advertising
Spending

Brand
Awareness

w
n

H4(+)

lo
ad

H7(-)

ju

y
th
H2(+)

yi
pl

Brand
Loyalty

H5(+)

Brand Equity

n

ua

al

va

Field
Support
Activities

H8(-)

n
ll

fu
Perceived
Quality

z

H9(-)

at

z
ht

vb

Sales
Promotion

nh

H6(+)

oi

m

H3(+)

k

jm
om

l.c

ai

Summary

gm

2.5.

This chapter goes through the literature review for both the concept of brand equity

a
Lu

and key elements of marketing communication. Three common components of

n

y

te
re

spending, (2) Field support activities and (3) sales promotion. The structural model

n

identified. Three key elements of marketing communication are (1) advertising

va

brand equity: (1) brand awareness, (2) perceived quality and (3) brand loyalty are

is also defined by which the relationship between key elements of marketing
communication and common components of brand equity are explained. This


Page 14 of 52

chapter also discusses on how each selected element of marketing communication

t
to

potentially affect each common component of brand equity, through that the

ng

relationships are hypothesized.The next chapter presents the research method used

hi
ep

to

validate

the

measures

and

to

test

the

hypotheses

do
w
n
lo
ad
ju

y
th
yi
pl
n

ua

al
n

va
ll

fu
oi

m
at

nh
z
z
ht

vb
k

jm
om

l.c

ai

gm
n

a
Lu
n

va

y

te
re