Customer based brand equity a study of trung nguyen coffee in viet nam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Nguyen Thi Kim Nhung
ID: 22110042

CUSTOMER-BASED BRAND EQUITY
A STUDY OF TRUNG NGUYEN COFFEE IN VIETNAM

MASTER OF BUSINESS (Honours)
SUPERVISOR: Prof. LE NGUYEN HAU

HO CHI MINH CITY - August, 2014


ACKNOWLEDGMENTS
This research could not have been done without the help and contributions
of many people that I am very thankful to. First of all, I would like to express my
deepest acknowledge to my supervisor, Professor Le Nguyen Hau for his help,
valuable advices and recommendations. Especially during the whole time of doing
thesis, his patient helps me to get through all mistakes in my work. Moreover, he
also teaches me much more than just finishing this thesis. Again, I want to say
“Thank You Very Much” to my advisor for all he has done for me.
I would like to use this chance to express my earnest appreciation to the
professors and lecturers of International School of Business (ISB) – UEH for their
guiding me in during my academic years at ISB. I have been assisted very much in
the completing of this thesis by the knowledge and skills that I have learned.
Furthermore, I would like to appreciate the contribution of people who help
me complete the survey questionnaires to share their valuable time and support me
with useful information for completing this thesis.

I also want to say “Thank You” to my friends, other senior students at ISB,
who are doing thesis at the same time with me, for your supporting and
encouragement during this difficult period of time and two years studying as well.
Most of all, we like to thank our families and friends for their unconditional
support and understanding during the research process.


TABLE OF CONTENTS
CHAPTER I INTRODUCTON .................................................................................... 1
1.1.

Background of research ............................................................................................... 1

1.2.

Research problem and purpose..................................................................................... 3

1.3.

Research objective ....................................................................................................... 3

1.4.

Scope of the study ....................................................................................................... 4

1.5.

Contribution of the study ............................................................................................. 5

1.6.

Organizational structure of the study ............................................................................ 5

CHAPTER II LITERATURE REVIEW & THEORETICAL FRAMEWORK ........ 7
2.1.

Concepts & Definitions................................................................................................ 7

2.1.1.

Overview of branding........................................................................................... 7

2.1.2.

Brand equity ........................................................................................................ 9

2.1.3.

Customer based brand equity ............................................................................. 11

2.1.4.

Aaker’s Brand Equity Model .............................................................................. 12

2.2.

Research model ......................................................................................................... 15

2.2.1.

Brand awareness ............................................................................................... 16

2.2.2.

Brand association .............................................................................................. 17

2.2.3.

Brand loyalty ..................................................................................................... 18

2.2.4.

Perceived quality ............................................................................................... 19

CHAPTER III RESEARCH METHOD ..................................................................... 21
3.1.

Research methodology ............................................................................................... 21

3.2.

Quantitative approach ................................................................................................ 21

3.3.

Questionnaire design ................................................................................................. 22

3.4.

Sampling ................................................................................................................... 27

3.5.

Pilot test .................................................................................................................... 28

3.6.

Data collection........................................................................................................... 28

3.7.

Data analysis ............................................................................................................. 29

CHAPTER IV DATA ANALYSIS & DISCUSSIONS .............................................. 32
4.1.

Respondent demographic profile ................................................................................ 32

4.1.1.

Sample demographic .......................................................................................... 33

4.1.2.

Central tendencies measurement of construct ..................................................... 34

4.2.

Evaluation and refinement of measurement scale ....................................................... 36

iv


4.2.1.

Reliability analysis ............................................................................................. 36

4.2.2.

Exploratory factor analysis ................................................................................ 39

4.2.2.1.

EFA results for measurement scales of independent factors .................................... 40

4.2.2.2.

EFA results for measurement scales of dependent factor – brand equity.................. 42

4.2.2.3.

Testing the relationship of independent factors and dependent factor ...................... 42

4.3.

Hypothesis testing ..................................................................................................... 44

4.4.

Discussion ................................................................................................................. 48

CHAPTER V CONCLUSIONS & RECOMMENDATION ...................................... 49
5.1.

Conclusion ................................................................................................................ 49

5.2.

Recommendation ....................................................................................................... 50

5.2.1.

Perceived quality ............................................................................................... 51

5.2.2.

Brand loyalty ..................................................................................................... 53

5.2.3.

Brand association .............................................................................................. 55

5.3.

Limitation and future research ................................................................................... 57

REFERRENCES ......................................................................................................... 59
APPENDIX A....................................................................................................................... 65
APPENDIX B ....................................................................................................................... 71

APPENDIX C .............................................................................................................. 78

v


LIST OF TABLES
Table 3.1: Measurement scale ........................................................................... 23
Table 4.1: Demographic profile ....................................................................... 30
Table 4.2: Descriptive statistics ........................................................................ 33
Table 4.3: Reliability Statistics ......................................................................... 37
Table 4.4: Rotated component matrix ................................................................ 41
Table 4.5: Cronbach‟s alpha after EFA .............................................................. 42
Table 4.6: Pearson correlation ........................................................................... 43
Table 4.7: Model summary ................................................................................ 45
Table 4.8: The coefficients ................................................................................. 46
Table 4.9: The hypotheses testing result ............................................................. 47

vi


LIST OF FIGURES
Figure 2.1: Brand equity ................................................................................... 10
Figure 2.2: Aaker‟s Brand Equity Model .......................................................... 14
Figure 2.3: Research model ................................................................................ 15
Figure 3.1: Research design ............................................................................... 19
Figure 4.1: Final model of the study .................................................................... 44

vii

ABSTRACT
Brand equity is one of the important concepts in brand management, as well
as in business practice and academic research. Developing and properly managing
brand equity has been emphasized as an important issue for most firms. Along
with coffee brand in Vietnam, the competition of coffee shop market is fierily and
fragmented due to numerous brands strike for consumer attention. This study uses
Trung Nguyen coffee as example to explore the impact of brand equity in
Vietnamese coffee shop market.
The research is to develop a model to measure the customer based brand
equity of Vietnamese Coffee and study the impacts of the brand equity‟s four
dimensions on brand equity. The findings in this paper with supporting of Trung
Nguyen Coffee‟s case study were found that only three dimensions of brand equity
(perceived quality, brand loyalty and brand association) have positive effect on
Brand equity.
The study shows that Trung Nguyen Coffee‟s managers and executives
should put their efforts primarily on building brand loyalty, brand association and
perceived quality in designing the marketing and brand building strategies.
This study also provides important insights about the understanding of
Hochiminh City consumers‟ perceptions of brand equity and its dimensions in the
premium roasted coffee market.

viii


CHAPTER I
INTRODUCTON
1.1.

Background of research

According to data from MARD (2013), Vietnam exported 14.5 million bags of
green coffee in the first seven months of 2013, an increase of 3 percent over the previous
year, designating Vietnam as the second largest coffee exporter in the world. Moreover,
Vietnam is also known as a coffee country with a long-standing coffee culture with first
appeared in 1857. Gradually it becomes a popular and important drink in the lives of
many Vietnamese people. Nowadays, many coffee brands, both foreign and domestics
have been penetrating all over Vietnam to satisfy the huge demand for coffee of
Vietnamese people.
Due to globalization, the domestic coffee market has also become very attractive
to foreign investors and many famous international coffee brands have appeared and
developed in Vietnam, such as NYDC Coffee, The Coffee Bean and Tea Leaf, Angel In
Us Coffee, Starbucks coffee, etc. which make the domestic roasted coffee market become
more competitive than ever. Confidence with many years‟ experience in producing
roasted coffee, Vietnamese coffee brands like Trung Nguyen coffee, Highland coffee,
Gogo coffee, etc. have tried to break into this market. Notwithstanding, most companies
have admitted it was difficult to increase even a small market share. The competition of
coffee market in the segment of premium roast coffee is now moving from price and
product‟s quality to brand building, particularly, the branding and product image are
becoming more and more significant to Vietnamese customers. So, brand equity is
1


recognized as an important part that assisting Vietnamese coffee marketers or companies
increase competitive advantage and assist to make management decision.
Beginning with the application of trademarks to products for the purpose of
product differentiation, brands have developed and become one of the key success factors
in firms achieving competitive advantage though differentiation (Wood, 2000). Brands
create added value for both firms and customer. According to Aaker (1991), brands play
a key role in increasing the value of products and protecting the product from being
imitated by competitors. If Vietnamese roasted coffee brands could deeply understand the

importance and get benefit from brand equity, they get greater profit and loyal customers.
These circumstances motivated me to investigate the relationship between selected brand
equity‟s dimensions and brand equity.
Founded by Dang Le Nguyen Vu in 1996, Trung Nguyen coffee was a small
business processing coffee in Ban Me Thuoc city. At that time, Vietnam had risen once
again to be one of the leading coffee producers in the world, but almost solely producing
"green" coffee (unroasted beans) that were sold on the commodity market. This resulted
in no control over the final coffee quality or prices. In 1998, the first Trung Nguyen
coffee shop was officially launched in Ho Chi Minh City. In 2001, Trung Nguyen coffee
shops were launched in all provinces. Up to now, Trung Nguyen coffee has more than 50
coffee shops operating throughout Vietnam. Trung Nguyen coffee is confident in the
future of sustainable development with the emergence and continuous growth of the
country. At the beginning, Trung Nguyen Coffee has recognized the importance of

2


branding and always tried to build its brand to become a high-class brand of coffee for
customers who have high income.
1.2.

Research problem and purpose

Competition is the most fundamental factor that directly affects the brand
emergence and growth (Laaksonen, 1994). Today, the competition is fiercely in all fields
due to the threat of new entrances and rivals, coffee shop market are not an exceptional.
The company always try to outperform their competitors to grab a greater share of
market, thus, an appropriate marketing strategy is necessary. Here, brand equity is a
concept in marketing field which plays an important role that affects developing business
for a company.

When the market is full of competition, the brand, the style and the quality of a
product are vital points in customer‟s selection. Vietnamese roasted coffee brands have
spent much money on producing mass of products, reducing prices, and introducing
promotional campaigns to attract customers but they forget that customers always choose
famous, trusted and reliable brands. Up till now, many domestic coffee enterprises cannot
build their own unique brand in an effective way associated with their roasted coffee.
Most of them have not yet achieved national recognition.
1.3.

Research objective

The main purposes of this study are to understand of the brand equity concept
employ in marketing. Especially, to measure and examine the effectiveness of brand
equity dimensions, i.e., brand awareness, brand association, perceived quality and brand
3


loyalty on consumer based brand equity creating and also determine what dimensions of
customer based brand equity have positive effect on the brand equity of Trung Nguyen
Coffee. The finding of this paper will help Vietnamese‟s coffee company to create
positive brand equity in order to increase the development of their future business growth
and profit, by answering follows questions:


What dimensions of brand equity have positive effect on perception of Vietnamese
coffee brand with representative is Trung Nguyen coffee?



How much they affect the brand equity of Trung Nguyen coffee?



What is the current brand equity level of Trung Nguyen Coffee?



How to improve the current brand equity level of Trung Nguyen Coffee?

1.4.

Scope of the study

The research is conducted in Ho Chi Minh City and on customers of Vietnam
coffee brands and mainly focused on Trung Nguyen Coffee. Moreover, this research just
focuses on some office buildings that have large number of officers who are the potential
customers of Vietnam‟s coffee brand. Thus the findings of this research cannot illustrate
the overall perception of entire customers in Vietnam about brand equity of Vietnam„s
coffee brand.
This research may not reflect the opinions of all Vietnam‟s coffee brand customers
in Ho Chi Minh City as the survey was mostly conducted at some office buildings in
some districts. Due to lacking of time and experience to analyze and research the real
problem, there could be some biases that might affect the results.
4


1.5.

Contribution of the study

The results of this study can help the managers of Vietnam‟s coffee brand
especially of Trung Nguyen coffee measure the current brand equity level of their brand
under the view of customers and figure out current problems in their branding strategies.
It also helps to come up with scientific solutions to improve the brand equity of
Vietnam‟s coffee brands and gain competitive advantages. The questionnaires designed
in this study can be applied in practice to support to the customer survey system of
Vietnam‟s coffee brands.
Moreover, the research may help Vietnam‟s coffee brands have a better
understanding of the influencing level of brand equity on customers. The results of this
study will not only be considered as a reference for similar coffee brands to review their
current services and performance, but it will also be the reference for further researches
on the related fields or sectors.
1.6.

Organizational structure of the study

The paper is organized as follows. First, introduction part includes general
background of the research, research problems and purposes, scope of the study,
significant, and structure of the study. Second section is the literature review which
shows up the definition and conceptual framework of the terms used as well as related
and previous studies. Third, research methodology presents an overview of the approach
used to conduct the research. Next, data analysis and discussion chapter is for analyzing
and discussing about the results based on the data collected. Then, conclusion and
5


recommendations are figured out in order to help answer the research question, make
suggestions and also provide some basic for further study.

6

CHAPTER II
LITERATURE REVIEW & THEORETICAL FRAMEWORK
This chapter provides the general of previous studies on the concepts and
definitions of branding, and theoretical related of building brand equity as well; and the
research model will also be presented later in this chapter.
2.1.

Concepts & Definitions

2.1.1. Overview of branding
The idea of branding has been applied for more than a hundred years (Feldwick,
1996). Until now, the meaning of brand has been changed a lot. The significant of brand
is also gaining which is considered as one of sustainable competitive advantage in
business.
Kotler (1994) defined brand as a name, term, sign, symbol, or design, or
combination of them, intended to identify the goods or services of one seller or group of
sellers and to differentiate them from those of competitors.
In the past, when brands were put on prodSucts with their features, characteristics
and logos to differentiate them from others, brands were perceived by customers as the
sources of the products that protected and prevented both the customers and the
producers from competitors who try to make the same products (Aaker, 1991). This has
become a traditional approach that ascertains brands as the visual feature of a product to
help distinguish it from another product.
7


However, the conditions of current market have changed due to the fact that it is
getting harder to recognize one product from others and build brands nowadays compare

with the past of a few decades ago (Aaker, 1991). Therefore, the traditional approach
with the mechanism of differentiating by focusing too much on products and emphasizing
on visual features is no longer suitable to the current market environment (Arnold 1992;
Crainer 1995).
In recent years, there has been a shift from product focus to a brand focus. The
new approach is the holistic perspective in which the brand itself is the main focus point
(Wood, 2000). Brand is underlined as an image in consumers‟ minds by this approach
(Keller 1993), brand personality (Aaker, 1996) and brands as added value (De
Chernatony & Mcdonald 1992; Doyle 1994). Hence, the product is only one attribute of
the brand under this approach.
This branding approach has been broadly accepted by researchers (Aaker, 1991;
Keller 1993). The brand is seen to provide benefits to the customer in both physical and
emotional needs, while the product can only satisfy the customer‟s physical needs. A
brand is therefore defined as “a product that provides functional benefits plus added
values that some consumers value enough to buy” (Aaker, 1991, p.1). Stephen King
states that “A product is something that is made in a factory; a brand is something that is
bought by a customer. A product can be copied by a competitor, a brand is unique. A
product can be quickly outdated, a successful brand is timeless.” (Aaker, 1991, p.1).
As a consequence, brands are now perceived as the key success element for
achieving competitive advantages in terms of revenue, profit, added value or market
8


share for firms by differentiating (Wood, 2000). Moreover, the attributes that differentiate
brands from other products provide the customer with satisfaction and benefits for which
they are willing to pay (Wood, 2000). In other words, brands create added value to both
firms and customers. Brands play an important role in increasing the value of products
and protecting products from being imitated by competitors (Aaker, 1991). Therefore, a
strong brand is counted as a valuable asset of a company (Aaker, 1991).
2.1.2. Brand equity

Since the term “brand equity” emerged in the 1980s, there has been a growing
interest in this subject among academic marketers and practitioners (Cobb Walgren, et
al., 1995). Many arguments about the meaning of the term brand equity have been raised
in different ways and for a number of different purposes (Keller, 2002). Brand equity is
the difference between overall brand preference and multi-attributed preference based on
objectively measured attribute levels (Park & Srinivasan, 1994); overall quality and
choice intention (Agarwal & Rao, 1996).
Brand equity is one of the significant concepts in brand management, as well as in
business practice and academic research (Kim et al., 2008). Developing and properly
managing brand equity has been emphasized as an important issue for most firms (Hao et
al., 2007). Because, it can help firms to gain or increase their cash flow to the business,
and make products differentiation in order to lead to competitive advantages (Yoo et al.,
2000; Aaker, 1991). Thus, brand equity is been appreciated as one of the most valuable
intangible assets by most firms (Hao et al., 2007).

9


One of the most popular definitions widely accepted in the branding literature is
that by Aaker (1991, p. 15). Aaker (1991) defined brand equity as “a set of brand assets
and liabilities linked to a brand, its name and symbol, that add to or subtract from the
value provided by a product or service to a firm and/or to that firm‟s customers” (Aaker,
1991, p. 15). The assets and liabilities in which brand equity is based that he proposed are
divided into five dimensions (Aaker, 1991): Brand loyalty, Name awareness, Perceived
quality, Brand associations, other proprietary brand assets – patents, trademarks, channel
relationship, etc.

Figure 2.1: Brand equity
(Source: Aaker, 1991)

10


2.1.3. Customer based brand equity
Brand equity is conceptualized from the perspective of the individual consumer
and a conceptual framework is provided of what consumers know about brands.
Customer based brand equity is defined as the differential effect of band knowledge on
consumer response to the marketing of the brand (Washburn and Plank, 2002).
Proponents argue that for a valuable brand must be valued by the customer.
In one of the earliest and most popular definitions of brand equity from the
viewpoint of individual consumers, brand equity is viewed as added value reflected by
increasing the attitudinal strength for a product using the brand (Farquhar, 1989). The
consumer attitude is explained as the link between an „object‟ and the „evaluation‟ of that
object saved in an individual‟s memory. For a customer, a strong brand is based on three
critical elements: a positive brand evaluation; a clear brand attitude; and a reliable brand
image. According to Martin and Brown (1990), brand equity is an impression of a brand,
which represents the whole of a consumer‟s perception about that brand. Sharing this
argument, Blackston (1992) describes brand equity as consumer‟s ideas about the brand.
Further, Edell (1993) supposes that brand equity is the difference between the consumer‟s
evaluation of a branded product and an unbranded product with the same attributes.
It can be said that the most widely accepted definition of consumer based brand
equity arises when the customer is acquainted with the brand and keeps some favorable,
solid and unique brand associations in memory (Keller, 1993). Moreover, Keller defines
brand equity as impact of different brand knowledge on the customer response to the
marketing of the brand in which brand knowledge is theorized, based on an associative
11


network memory model in terms of two factors, brand image and brand awareness
(Keller, 1993, p. 1). Therefore, as said by this definition, a brand is said to have positive

customer based brand equity if customers react more favorably to the product, promotion,
price or distribution of the brand than they do to the same marketing mix element when it
is attributed to a fictitiously named or unnamed version of the product or service (Keller,
1993).
A thorough understanding of brand equity from the customer‟s point of view is
essential for successful brand management. As Keller (1993) explained, positive
customer based brand equity can create greater revenue and higher profit, reduce cost. It
has direct influences on the firm‟s ability to charge higher prices, a customer‟s
willingness to look for new distribution channels, the efficiency of marketing
communications, and the success of the extensions of brand and licensing opportunities
(Keller, 1993).
2.1.4. Aaker’s Brand Equity Model
Customer based brand equity is a multidimensional construct consisting of various
attitudinal and/or behavioral components (Anantachart, 1998). However, most of
customer based brand equity models are measured by attitudinal components. As the
most common constructs of measurement models are brand image or brand association
(Kim & Kim, 2004; Martin & Brown, 1990; Pappu et al., 2005; Washburn & Plank 2002;
Yoo et al., 2000); brand awareness (Holden & Lutz, 1992; Nguyen & Nguyen, 2003;
Washburn & Plank, 2002; Yoo et al., 2000) and brand preference (Anantachart, 1998;
Nguyen & Nguyen, 2003). Brand equity‟s behavioral components are also measured in
12


some research as parts of the combination of attitudinal components of customer based
brand equity, brand performance (Lassar et al., 1995) and brand loyalty (Kim & Kim,
2004; Nguyen and Nguyen, 2003; Washburn & Plank, 2002; Yoo et al., 2000). In
empirical studies, to measure brand equity, the Aaker‟s brand equity model (1991) has
usually been used (Baldauf et al., 2003; Cobb-Walgren et al., 1995; Kim & Kim, 2004;
Washburn & Plank 2002; Yoo et al., 2000). This model was one of the first published
studies that conceptualized brand equity from the perspective of customer, combining

both the attitudinal and behavioral aspects of brand equity. It probably provides the most
comprehensive framework for examining brand equity (Anantachart, 1998).
This model groups the assets that make up brand equity into five dimensions that
are perceived quality, brand associations, brand awareness, brand loyalty and other
proprietorial brand assets. These categories are the fundamental cornerstones and
symbolize crucial pieces in the process of enhancing brand equity. Asaker‟s brand equity
model can be looked upon as a puzzle that more value will be achieved as the whole
puzzle is correctly fitted.

13


Perceived
Quality

Brand
Association

Name
Awareness

Brand Equity
(Name
Symbol)

Other Proprietary
Brand Assets

Brand
Loyalty

Provides Value to firm by enhancing:

Provided Value to Customer by
Enhancing Customer's






Interpretation/Processing of
information
Confidence in the Purchase
Decision
Use Satisfaction







Efficiency and Effectiveness of
Marketing Program
Brand Loyalty
Price/ Margins
Brand Extensions
Trade leverage
Competitive advantage

Figure 2.2: Aaker’s Brand Equity Model
Source: (Aaker, 1991, p. 17)
Many former studies and researches assessing the applicability of Aaker‟s (1991)
model show encouraging results. The first study which adopted Aaker‟s (1991) model to
measure consumer-based brand equity was the study of Cobb-Walgren et al. (1995),
which included four dimensions: brand loyalty, perceived quality, brand awareness and
brand association. Meanwhile, Sinha & Popkowsi Lesczyzc (2000) and Sinha & Pappu
(1998) adapted Aaker‟s (1991) model to measure customer based brand equity using

14


Bayesian methods (Pappu et al. 2005). In addition, this model has also been tested in
other empirical studies such as Kim and Kim (2004); Vazquez, Del Rio &Iglesias (2002),
and Washburn & Plank (2003) and found to reliable and valid.
2.2.

Research model

Base on the literature review discussed above, Aaker‟s brand equity model (1991)
is chosen to be applied in this study of Vietnam‟s coffee brand. The original model
presented by Aaker (1991) comprises of five dimensions: brand awareness, brand
associations, brand loyalty, perceived quality and other brand assets. The five dimensions
are tested with the overall evaluation of customers. And with Aaker‟s brand equity
model, this study is conducted to retest the measurement of customer based brand equity
with four dimensions that are brand awareness, brand associations, brand loyalty and
perceived quality, which is shown in following figure:
Figure 2.3: Research model

Brand
association
s
(H2+)

Brand
loyalty
(H3+)

Brand
awareness
(H1+)

Perceived
quality
(H4+)

Brand
equity

15


In the research model, the independent variables are separated into four categories,
which are brand awareness, brand associations, brand loyalty and perceived quality. The
four categories of chosen independent variables will influence on the dependent variable,
which is Brand equity.
2.2.1. Brand awareness
Brand awareness refers to the strength of the presence of a brand in consumers‟
minds and is a principal component of brand equity (Aaker, 1991; Keller, 1993). Brand

awareness may be a signal of quality and commitment, let customers become familiar
with a brand and make them consider it at the point of purchase (Aaker, 1991).
Aaker (1991) mentioned many levels of brand awareness, ranging from simple
recognition of the brand to dominance, which states the condition that the brand involved
is the only brand a consumer recalled. Aaker (1991, p. 61) describes brand awareness as
the potential buyer‟s ability to recognize and recall that a brand is a member of a certain
product category. According to Keller (1993), brand awareness consists of two sub
dimensions: brand recall and recognition. Keller (1993) explains brand recall as the
ability of retrieving the brand from memory of customers, for example, when the product
category or the needs fulfilled by the category are mentioned. Keller (1993) also argued
that brand recognition may be more important to the extent that product decisions are
made in the shop.
Brondoni (2001) argued that level of awareness become a critical factor when
competitors‟ offers are related to a condition of direct comparability and other factors of
16


selection. Brand awareness plays an important role in brand equity such as consumers
think about the brand when they think about the products/services so raising brand
awareness increases the likelihood that the brand will receive repeated consideration of
purchase. Customer based brand equity happens when customers have a high level of
awareness and familiarity with the brand and hold some strong, positive, and unique
brand associations in memory. Thus, the following hypothesis is posited:
H1: Brand awareness has a positive effect on brand equity.
2.2.2. Brand association
Brand association is described as the information nodes linked to the brand node
in memory that results in the meaning of the brand for consumers (Keller 1993). The
favorability, strength and distinctiveness of brand association are the brand knowledge‟s
dimensions, which is the source that creates the differential response of the customer,
creating brand equity (Keller 1993).

Aaker (1991) positions brand association as the most accepted dimension of brand
equity, including product attributes; customer benefits; uses; users; lifestyles; product
classes; competitors; and nations. Brand association can help the customer to process or
to retrieve information. Further, Aaker (1991) suggested that brand associations could
provide value to the consumer by providing a reason for consumers to buy the brand and
creating positive attitudes/feelings among consumers. Rio et al. (2001) also proposes that
brand associations are a key element in brand equity formation and management.
Generally, brand association is what customers hold in their mind about a brand related to

17


their needs and demands (Wood 1998). In this respect, high brand equity implies that
consumers have strong positive associations with respect to the brand. Thus, the
following hypothesis is posited:
H2: Brand association has a positive effect on brand equity.
2.2.3. Brand loyalty
Brand loyalty is a main component of brand equity. Aaker (1991, p. 39) describes
brand loyalty as a condition, which reflects the possibility that a customer will switch to
another brand, especially when that brand changes, either in price or in product traits.
Javalgi and Moberg (1997) defined brand loyalty consistent with behavioral, attitudinal,
and choice perspectives.
Whereas behavioral perspective is based on the amount of purchases for a certain
brand, attitudinal perspective combines consumer preferences and natures towards
brands, definitions of choice perspective concentrates on the purposes of purchasing or
the factors that may influence on choices. These brand loyalty definitions were
empirically researched under three major categories: behavioral approach, attitudinal
approach and multi domain approach (Rundle-Thiele & Bennett, 2001).
Brand loyalty is also conceptualized based on an attitudinal perspective.
Chaudhuri and Holbrook (2001) argued that attitudinal brand loyalty includes a level of

dispositional commitment about some unique value attached to the brand. From an
attitudinal perspective, Yoo and Donthu (2001) defined brand loyalty as the tendency of

18