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Brand Loyalty

Brand Loyalty

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MIP 29,3

Brand loyalty in emerging markets
Tho D. Nguyen
Faculty of Business Administration, University of Economics, HCM City, Vietnam and College of Business, University of Western Sydney, Sydney, Australia, and

Received February 2009 Revised September 2009 Accepted February 2010

Nigel J. Barrett and Kenneth E. Miller
Faculty of Business, University of Technology, Sydney, Sydney, Australia
Purpose – This paper seeks to compare some key antecedents of brand loyalty between two emerging markets: Thailand and Vietnam. Design/methodology/approach – Using a sample of 603 female consumers of international shampoo brands, including 304 consumers in Bangkok, Thailand and 299 users in Hanoi, Vietnam, a model was tested that incorporates key determinants of brand loyalty – perceived quality, brand awareness, advertising attitudes, and distribution intensity – by means of structural equation modeling. Findings – The paper found that there are positive relationships between perceived quality and brand loyalty, between brand awareness and perceived quality, between advertising attitudes and brand awareness, and between distribution intensity and brand awareness in both markets. However, the relationship between brand awareness and brand loyalty was found only in the Vietnamese market, and the relationship between advertising attitudes and perceived quality was only found in the Thai market. Finally, no relationship between distribution intensity and perceived quality was found in either market. Research limitations/implications – A major limitation of this study is the examination of only one concept that stands for strong brands, i.e. brand loyalty. Several other concepts, such as brand relationship quality and brand impressions, should be investigated in future research in order to compare and contrast with those found in advanced economies. Practical implications – The results of this study suggest that managers of international brands in emerging markets should recognize the differences between markets in order to design effective loyalty programs for each market. Originality/value – A major contribution of this study is to empirically compare the impacts of perceived quality, brand awareness, advertising attitudes, and store image on brand loyalty in two emerging markets: Thailand and Vietnam. Keywords Brand loyalty, Emerging markets, Vietnam, Thailand Paper type Research paper

Marketing Intelligence & Planning Vol. 29 No. 3, 2011 pp. 222-232 q Emerald Group Publishing Limited 0263-4503 DOI 10.1108/02634501111129211

Brands play a central role in marketing and have attracted the attention of academics and practitioners over many years (Aaker, 1991; Brodie et al., 2009; Erdem et al., 2006). Accordingly, several perspectives on brands have been found in the literature (Ambler and Styles, 1996). Traditionally, a brand is defined as “a name, term, design, symbol, or any feature that identifies one seller’s good or service as distinct from those of other sellers” (Bennett, 1995, p. 17). According to this approach, the brand is viewed as part of a product, and the main function of the brand is to distinguish a firm’s product from competing products, i.e. it is an identifier. A more holistic approach defines a brand as:

Relative to Vietnam. 1996). Little research has been devoted to the issue in emerging markets. 2000. VBFR. This has presented opportunities for international marketers.. and thus. 2003). p. The paper is structured as follows: introduction to the Thai and Vietnamese markets. Most Vietnamese firms have not recognized the importance of brands and branding. Replication studies have found that a number of original models were not supported (Darley. and a GDP growth rate of about 6 percent. . However. With a population of more than 60 million. especially in business research (Easly et al. Specifically. This results in the isolation and fragmentation of the literature (Hubbard and Vetter. TBFR. leading to the success of several international brands in the market. the product is regarded as a component of the brand. In addition. 1996).5 percent annually (VBFR. In terms of economic development. whereas. Thailand is more developed and is a lower-middle-income economy (GDP per capita around US$2. This study attempts to bridge this gap by examining key antecedents of brand loyalty in two emerging markets: Thailand and Vietnam. discussion and implications. rational or emotional. 2005). Vietnam is also a potential market for international brands. or the use of a company’s name as a brand name to distinguish its products from those of competitors. For example. in which a key objective has been to attract foreign direct investment. and perceived quality on consumer loyalty to international brands in these two markets. A survey conducted by Taylor Nelson Sofres in 2004 found that up to 47 of percent Vietnamese consumers agree that the country-of-origin is more important than brand names (The Wall Street Journal. conceptual model. 1996.. 1996). methods. has been a common approach (Nguyen et al. With a population of more than 80 million. brand awareness. replication research plays an important role in science. tangible or invisible (Ambler and Styles. results. multinational companies (MNCs) such as Unilever. 1996). Hubbard and Vetter. Vietnam is a low-income economy (GNP per capita around US$534. The markets: Thailand and Vietnam Thailand and Vietnam have a number of similarities as well as differences. nevertheless. both markets can be classified as emerging markets in South East Asia. it is rarely undertaken in the social sciences. encouraged the entry of several MNCs (such as Procter & Gamble and Unilever) 223 . p. 11): “It’s a golden time in Thailand for multinational brands such as Sunsilk and Care Baby Powder”. and a GDP growth rate of about 7. marketing activities of firms have gradually focused more on the brand instead of the product. As observed by SPC Asia (2005. Unbranded products. The product simply provides consumers with functional benefits. 2005).] The attributes that make up the brand may be real or illusory. The concept of brands and branding has only recently happened in Vietnam. and limitations and directions for future research. However. Brand loyalty In this approach. . Colgate-Palmolive. 2004). 2000). whereas the brand provides consumers with not only functional benefits but also with emotional benefits. Consequently. in the hair care market. 2006). and Procter & Gamble are playing a leading role in Thailand. thereby. leading academics to discover factors that constitute strong brands (Aaker. such attention has occurred mainly in the developed world. it compares and contrasts the role of advertising attitudes.[. satisfaction (Hankinson and Cowking.] the promise of the bundles of attributes that someone buys and that provides satisfaction [. It is a necessary part of knowledge development. 10).565. . distribution intensity. . Vietnamese consumers are not so familiar with brand consideration and choice. Thailand is a relatively large market in the region. The new economic reforms introduced by the Vietnamese Government in 1986.

1991. this rate reached 80 percent in 2004. 392). Brand loyalty is a valuable asset for every brand. The surveys also indicate that. 2008). i. in 1999. In most models of brand equity. establishing new accounts. Yoo et al. 1991) or an outcome (Erdem and Swait. Research has indicated that the cost of recruiting new customers is very high due to advertising. Woodside and Walser. Brand awareness is defined as “the strength of a brand’s presence in the consumer’s mind” (Aaker. Erdem et al. p. 2000). 2006). 2008. Veloutsou and Moutinho. Among the concepts used to describe a strong brand. Kressmann et al. p. there are several definitions and measures of brand loyalty. research on brand loyalty and its antecedents is still of interest to many researchers (Gounaris and Stathakopoulos. Accordingly.3 224 into the market in the early 1990s. 1998). brand awareness. This indicates that some brands have well-established positions in the market.MIP 29. However. Figure 1 shows these relationships and hypotheses. For example. the creation of loyal consumers. 2007. i. Orth and Malkewitz. 2003). brand loyalty is posited to be either a component (Aaker.. such as brand awareness. brand relationship (Aggarwal. profits generated by loyal customers increase significantly over time (Reichheld and Sasser. and advertising attitudes are posited to be key factors that have direct and/or indirect effects on brand loyalty. Some stem from cognitive psychology.. Smit et al. and customer training (Mittal and Lassar. 2009. However. especially in urban areas of the country. Accordingly. perceived quality. Tsao and Chen. 2004). and clarity (Erdem and Swait.. 1996). 2007. brand loyalty is perhaps the one that has received the most attention by academics and practitioners (Malai and Speece. 79 percent of Vietnamese consumers agreed that they often switch brands. Although the perspectives differ. 1997. 1990). Others come from information economics. 2005. High brand awareness. 1996. Oliver. For that reason. i. 1998) of brand equity. very little research on branding in this market has been undertaken (Nguyen et al. their common focus is on what makes a brand strong. surveys by Taylor Nelson Sofres Vietnam in 1999 and 2004 reveal that. based on consumer cognitive processes. in 1999. 54 percent of consumers paid more to “enjoy the finer things of life”.. 2005). 2004. perceived quality. based on the signal of the brand to the consumer such as brand credibility. and brand personality and impressions (Aaker. distribution intensity. Fournier. 2006. More importantly. consistency. 1998. Unfortunately. 2004. 1998. 10).e. 1997). The brand promotion programs launched by these MNCs have shifted Vietnamese consumers’ shopping habits from purchasing products to purchasing brands.e. 2007). 1997. some focus on the attitudinal dimension and others focus on the behavioral aspect of brand loyalty (Gee et al. Brand awareness and perceived quality There is widespread agreement among researchers that brand awareness is a reliable measure of the strength of a brand (Aaker. brand loyalty “is a deeply held commitment to rebuy or repatronize a preferred brand consistently in the future.e. 2005). and brand loyalty (Aaker. Fennis and Pruyn. Tsao and Chen. . despite situational influences and marketing efforts having the potential to cause switching behavior” (Oliver. In this study.. personal selling. In this study. Literature review and hypotheses The literature reveals several approaches to evaluating the strength of a brand. Vietnamese consumers have tended to become more sophisticated in their consumption behavior.. this rate became 47 percent in 2004 (The Wall Street Journal.

plays an important role in the explanation of brand loyalty. is a signal of quality that assists consumers in making purchase decisions (Aaker. 2000). which can be defined as “a learned predisposition to respond in a consistently favorable manner toward advertising in general” (MacKenzie and Lutz. H3. 1989. Yoo et al. Consequently.resulting from brand associations. they intend to search for more information about the brand. when consumers prefer the brand’s advertising programs. 1991). Positive attitudes of consumers toward advertising programs of a brand will stimulate consumers to recognize the distinctiveness of the brand compared to competing brands. as mentioned previously. consumers have an opportunity to discover the presence of a brand and its associations. 2000. relative to alternatives” (Aaker. Advertising is believed to be an effective tool to promote brands. In addition. 1998). with brand awareness. Therefore: Advertising attitudes H5 Perceived quality H7 H3 H4 Distribution intensity Brand awareness H2 H1 Brand loyalty 225 Brand loyalty H6 Figure 1. 84). The interactions between brand behavior and consumer behavior could be expected to make a strong affective tie with the brand (Fournier. familiarity can encourage buying decisions..e. When consumers perceive that the brand has high quality compared to other brands in a competitive set. awareness may help consumers become familiar with the brand. Villarejo-Ramos and Sanchez-Franco. which refers to “the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose. Yoo et al. Mehta. Such activities will improve customers’ attitudes and perceptions about the brand and assist consumers in perceiving the quality of the brand (Mehta. Perceived quality is based on the judgment of consumers about the attributes of a brand that are meaningful to them. perceived quality. There is a positive relationship between perceived quality and brand loyalty.. Petrovici and Paliwoda. brand awareness can be viewed as an antecedent of brand loyalty. Further. 2006. Together. consumers cannot perceive the quality of the brand if they are not aware of it. Through advertising. has received considerable attention from researchers and practitioners (Li and Miniard. Therefore. 1991. they recognize the differences among them. 2005. especially for low-involvement products (Aaker. 53-4). 2007). Conceptual model . pp. 1991. Therefore: H1. Advertising attitudes The attitude of customers toward advertising. it is a perception. it can be argued that awareness is necessary to enable consumers to differentiate a brand’s attributes from its competing brands. H2. p. i. There is a positive relationship between brand awareness and brand loyalty. There is a positive relationship between brand awareness and perceived quality. they are likely to put a high value on the brand. When consumers evaluate a brand in relation to other brands in the competitive set. driving their purchase and repurchase decisions. Also. 2000. However. 2000).

perceived quality. Shampoo was chosen because it is a product that consumers often pay considerable attention to when making purchase decisions due to its perceived value in enhancing their appearance. However. The questionnaires. due to some invalid questionnaires which were removed from the sample. in Vietnam. There is a positive relationship between distribution intensity and brand awareness. In Thailand. 226 Distribution intensity Distribution intensity refers to “the number of intermediaries used by a manufacturer within its trade areas” (Frazier and Lassar. There is a positive relationship between distribution intensity and perceived quality.3 H4. There is a positive relationship between advertising attitudes and brand awareness.. and eight popular brands (Pantene. Brand loyalty was measured . and in Hanoi. the numbers of consumers in the two groups of each category varied slightly. 1996. The total sample size was 603. Respondents were chosen using equal quotas for both country and demographic categories: countries (Thailand and Vietnam). Measurement There were five constructs used in this study: brand loyalty. the capital city of Vietnam. Double Rich. brand awareness. the convenience of being able to find the brand when and where consumers want it saves them time. There is a positive relationship between advertising attitudes and perceived quality. Sunsilk. Method Sample The hypotheses were tested using female consumers of shampoo in Bangkok. H7. for comparison purposes between the two markets. were distributed to respondents by an interviewer. Accordingly: H6. The unit of analysis of this study was consumers. and Wella) were chosen for Bangkok. In order to minimize possible response bias. Head & Shoulders. female consumers were selected for study. Organics. education (with and without a bachelors degree). advertising attitudes and distribution intensity. and income (low and high). There were no right or wrong answers. Convenience sampling was used. H5. with instructions of how to complete them. thus increasing satisfaction and enhancing the brand’s value (Yoo et al. Table I shows the characteristics of the sample in both countries: Thailand and Vietnam. Rejoice. age (young and old). After completion. However. Rejoice. Sunsilk. It can be argued that the more intensive the distribution of a brand the greater are the opportunities for consumers to become aware of the brand. and subsequently purchase it. Head & Shoulders. Six popular brands of shampoo (Pantene. the capital city of Thailand. the decision makers for shampoo are both male and female members of the family. the questionnaires were checked and collected by the interviewer. 39). Kao. 2002).MIP 29. Therefore. and Feather) for Hanoi. 2000). Clear. Also. instructions emphasized that the study focused only on their personal opinions. comprising 304 female consumers in Bangkok and 299 female consumers in Hanoi. p. the decision maker for shampoo in the family is female (Nguyen and Nguyen.

001). and. [170] and. These two items were: the ad of X is very attractive. Back translation was also undertaken to ensure the equivalence of meaning (Brislin.044. These findings support the convergent and discriminant validity between constructs (Steenkamp and van Trijp. These items were: I can recognize X among other brands.961. 1970). 2000). TLI ¼ 0. 1995. addressing the degree of brand recognition (Yoo et al.. 24 years of age) 157 161 318 Income Lowa Higherb Total 164 141 305 140 158 298 304 299 603 Brand loyalty 227 Country Thailand Vietnam Total Notes: aLess than US$120/month in Vietnam and less than US$500 in Thailand. The questionnaire was developed in English and was then translated into Thai and Vietnamese languages.. asking consumers about their perception of the brand quality (Aaker. These [160] findings support the configural invariance of the five-factor model. I have no difficulty in imaging X in my mind. TLI ¼ 0. 1996).0. I can buy X everywhere in Bangkok (Hanoi). CFI ¼ 0. Sample characteristics . Advertising attitudes was measured by two items. RMSEA ¼ 0.949. some characteristics of X come to my mind quickly. anchored by 1 – strongly disagree and 5 – strongly agree. Other measures of fit also indicate that these two models were [10] not significantly different in terms of model fit: CFI decreased an insubstantial 0. and distribution intensity. X is of high quality. RMSEA ¼ 0.. Education Without a BA BA and degree postgraduate 164 166 330 140 133 273 Age Young (18-24 years of age) 147 138 285 Older (. 0. overall. 2000): there are many stores that sell X. 0. overall. Brand awareness was measured by four items. addressing preference of consumers on advertisements.98. All factor loadings were substantial (.52 ( p . I try to find X rather than buying other brands.by three items assessing the overall commitment of being loyal to a specific brand (Yoo et al. 1995. These items were: I consider myself to be loyal to X. All items were measured using a five-point Likert scale.043). These items were: X would cure my dandruff. Steenkamp and Baumgartner. The results indicate that the CFA five-factor model received a good fit to the data: x 2 ¼ 344.950. 0. These findings provide evidence to support the metric invariance of measures (Mullen.001. brand awareness. configural and metric invariance were tested using multi-group confirmatory factor analysis (CFA. 1998).001). I know what X looks like. All factor correlations were significantly below unity ( p . X would make my hair silky. 0. distribution intensity was measured by two items (Yoo et al. Steenkamp and Baumgartner. advertising attitudes. and. Five constructs were investigated: brand loyalty. I would not buy other brands if X is available at the store. I like the ad of X. TLI and RMSEA increased.06 ( p . X would not make my hair dry. 1998). Perceived quality was measured by four items. bfrom US$120/month or more in Vietnam and from US$500/month or more in Thailand Table I. 1991). 2000). and.960. Equality of factor loadings was also supported: x2 ¼ 362.05). 0. perceived quality. and.58) and significant ( p . The comparison between these two models (non-equality and equality of factor loading models) indicates that the x 2 statistic was not significant: Dx 2 ¼ 22.05). and. Data analysis and results Cross-national measurement validation Before comparing the results from Thailand and Vietnam.90 ( p .001). CFI ¼ 0. and. and. Mullen. Finally.

Table II presents factor loadings. 1989) was used to test the hypotheses as well as to compare the structural relationships in the model between the two markets (Thailand and Vietnam). and.001).54 0.046).84 0. p .85 0.76 0.82 0. composite reliability.50 0.82 0.64 0. and.78 0. This hypothesis was supported both in Thailand (b ¼ 0. H2 proposes a positive relationship between brand awareness and brand loyalty.005) and in Vietnam (b ¼ 0. which are suitable for cross-national research (Singh.954. 0.82 0.01) and in Vietnam (b ¼ 0.20. Further. Factor loadings.79 0.82 0.77 0. 0.68 0.73 0.04. 1995).84 0.001) but failed to reach statistical significance in Thailand (b ¼ 0.58 0. was also supported both in Thailand (b ¼ 0.28.75 0.85 0. H3 proposes a positive relationship between brand awareness and perceived quality.001).69 ( p .66 0. 0. 0.001).52).80 0.66 0. First.001). 0. However. RMSEA ¼ 0.42. p . Model A (unconstrained model) was selected over model B (constrained model) because it received better fit: Dx2 ¼ 24.85 0. H4.86 0.79 0.81 0.958.001).87 0. 0.80 0.94. Next. TLI ¼ 0.001) and Vietnam (b ¼ 0.60 228 Construct Brand awareness Table II. p . Thailand sample Vietnam sample Factor Composite Average variance Factor Composite Average variance Item loading reliability extracted loading reliability extracted 0.3 In sum.78 0.87 0.27. 0.76 0. cross-national invariance of the measures used in this study was supported.26. Consistent with H1. TLI ¼ 0. 0.MIP 29. RMSEA ¼ 0. p . [164] CFI ¼ 0. p .66 .65.80 0.40 [7] ( p . 0.83 0.e. model B: x 2 ¼ 391. no improper solutions were found in any results of the tests (Heywood cases were absent and all standardized residuals were less thanj2.70 0. and average variance extracted for constructs Aw1 Aw2 Aw3 Aw4 Perceived Pq1 quality Pq2 Pq3 Pq4 Distribution Di1 intensity Di2 Advertising Ad1 attitudes Ad2 Brand Ly1 loyalty Ly2 Ly3 0.22.80 0.60 0.76 0.79 0. 0.001).045. composite reliability.001).94 0.943. It is also noted that the correlation between distribution intensity and advertising attitudes was found to be significant (r ¼ 0.29 ( p .946. a positive relationship between perceived quality and brand loyalty was found in both Thailand (b ¼ 0. are reported in Table III. 0.80 0. and average variances extracted.86 0.74 0. constraints were imposed for the structural paths for both markets. The results of the multi-group analysis show that both models (models A and B) received good fit to the data (model A: x 2 ¼ 367. The unstandardized structural coefficients.71 0. p .81 0.86 0.78 0. i. p . This hypothesis was supported in Vietnam (b ¼ 0. p . [171] CFI ¼ 0. 0. p .58j). proposing a positive relationship between advertising attitudes and brand awareness. Analysis involved two steps.84 0.68 0. Tests of hypotheses The multi-group analysis in structural equation modeling (Bollen. the two samples were used to estimate the paths in the model with no structural paths constrained (model A). all the structural paths in the model were set to be equal for both markets (model B).

27 0.34 0.16) nor in Vietnam (b ¼ 0. p .062 0. 0. Vietnamese consumers may perceive that all brands manufactured by Japanese companies have the same quality. originating from the same country.078 0.65 0. These findings are consistent with previous research on branding in advanced economies: brand awareness and perceived quality are components of brand equity (Aaker.068 0. consumers perceive the differences between the major brand alternatives in a product category. Second.11.11 0. the brand has distinctive associations that help consumers distinguish it from competing brands.25. Vietnam is a transitional market. Inconsistent with H7. Discussion and implications This study empirically examines key determinants of brand loyalty and contributes to the literature on branding in the developing world by making a comparison between Thai and Vietnamese consumers. i.000 0. This finding suggests that managers of international brands design marketing programs that are able to communicate distinctive associations with their brand in order to create high Thailand sample (n ¼ 304) b SE p-value 0. and the relationship between brand awareness and perceived quality are found to be significant in Thailand as well as in Vietnam.26 0.01 0.H5 proposes a positive relationship between advertising attitudes and perceived quality. i.000 0. This may lead to high within-country brand parity. 2004).e.000 0.086 0.04 0..11.105 0. First. 0.22 0.e. to be small (Iver and Muncy.001) and in Vietnam (b ¼ 0.27). H5. consumers in Vietnam still pay more attention to the country-of-origin than to the brand (The Wall Street Journal. a brand that receives high attention from customers. The findings of this study indicate a number of similarities as well as differences exist between Thailand and Vietnam. 0. H6. and advertising and distribution are key determinants of brand awareness (Yoo et al.091 0. where marketing activities supporting brands are still underdeveloped.073 0.002 0. 2005). 2000).42 0. Contrary to the finding in H2.05). the effect of brand awareness on brand loyalty is found to exist only in Vietnam. For example. The results indicate a difference between these two markets.165 Vietnam sample (n ¼ 299) b SE p-value 0.040 0. H7 proposes a positive relationship between distribution intensity and perceived quality.888 0.074 0. H3.275 Brand loyalty 229 Structural paths H1. p . this hypothesis was found to be significant in Thailand (b ¼ 0. The impacts of advertising attitudes and distribution intensity on brand awareness are also found to be significant in both markets.520 0. p .000 0.01.11 0. H2.05) but not in Vietnam (b ¼ 0. In addition. In this case. 0.10 0.001 0. H4. Perceived quality ! Brand loyalty Brand awareness ! Brand loyalty Brand awareness ! Perceived quality Advertising attitudes ! Brand awareness Advertising attitudes ! Perceived quality Distribution intensity ! Brand awareness Distribution intensity ! Perceived quality Table III. p .089 0. 0. p .063 0.055 0. and the effect of advertising attitudes on perceived quality exists only in Thailand. 0. this relationship was found to be neither significant in Thailand (b ¼ 0.105 0. will have a competitive advantage.000 0. Unstandardized structural coefficients (b) with standard errors .000 0. H6 proposes that distribution intensity is positively related to brand awareness.88). this relationship was found to be significant both in Thailand (b ¼ 0. the relationship between perceived quality and brand loyalty.019 0. p . 1991). Similar to H1 and H3.063 0.94 0. Compared to Thailand. Finally. H7.068 0.10.25 0.20 0.34.

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