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SEPTEMBER 2011
VOL 3, NO 5

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS The Impact of Brand Equity on Advertising Effectiveness ( Samsung and Snowa brand names as a case study)
BahramRanjbarian, PhD. Professor of Marketing, University of Isfahan Department of management, University of Isfahan, Hezarjerib Street, Isfahan, Iran SeyedehMasoomehAbdollahi (corresponding author) M.A Candidate Department of management, University of Isfahan, Hezarjerib Street, Isfahan, Iran ArezooKhorsandnejad M.A Candidate Department of management, University of Isfahan, Hezarjerib Street, Isfahan, Iran

Abstract: Companies spendinga considerable amount of moneyon advertisement tointroduce their products to consumers in order to attract their attention and persuade them to prefer their brand.But can these expenses lead to a favorable result? It is assumed that brand reputation affect advertising effectiveness positively.The purpose of this studyis to establish a theoretical and empirical basis that shows the impact of brand equity on advertising effectiveness.The citizen of Isfahan city who have watched the target advertisements were the population of the study.Random sampling method was used for collecting data. In order to analysis the relationships between brand equity dimensions(perceived quality, brand loyalty, brand awareness and brand association)and advertising effectiveness, structural equation modeling (SME) is used. The results indicate that brand equity has a positive effect on advertising effectiveness. Keywords:Advertising effectiveness, Brand equity, brand loyalty, Perceived quality 1. Introduction Building a strong brand in a marketplace is the goal of every organization; it provides a host of benefits for a firm, including less vulnerability to competitive marketing actions, larger margins, greater intermediary cooperation and support, and brand extension opportunities (Delgado-Ballester and Munuera-Alemán, 2005). Almost every marketing activity works, successfully or unsuccessfully, to build, manage, and exploit brand equity (Yoo, Donthu, and Lee, 2000). In the past decade, brand equity construct have been focus of a tremendous number of researches ( Yoo and Donthu, 2001). Since the late 1980s, the rise of the value-based management philosophy, brand equity has been developed into one of the key marketing concepts throughout management theory and practice (Mustafa Khan, AfrozShahid and AsifAkhtar, 2009). An important part of organization`s marketing activities refers to designing and implementation of appropriate advertising programs in order to introduce company`s products and services to target markets and influence consumers. Even though appropriate advertising programs can lead to favorable results such as higher profit driven by higher levels of sales, but it is costly. If an advertisement program fulfills its goal, the company could manage the costs and benefits and it can be considered as an investment. Advertising will only survive and grow if it focuses on being effective. Every advertiser is expecting specific results, based on their stated objectives. Clients expect assurance, and, for the most part, that assurance must lead to or actually produce sales. Advertising must be effective. It must achieve its objectives. Effectiveness of an advertisement is not limited to simply the purchase of a product but rather is extended to a range of psychologicaland cognitive aspects related to awareness and intention that may play an important role in the purchase decision in a longer time frame (Ramalingam et.al, 2006). It is commonly accepted that advertising is useful in building brand equity (Keller, 2005). Also advertisement create a favorable attitude toward a brand through a transfer of affect from the ad to the brand (Machleit ; Wilson 1988). But it seems that the influence of brand equity on advertisement effectiveness is remained untapped. But it seems that the influence of brand equity on advertisement effectiveness is remained untapped. This study seeks to understand the role of company`s brand equity on advertising effectiveness for two brands of Samsung and Snowa in the city of Isfahan.

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p. 2006). 2007). Brand awareness includes consumer recognition. researchers have paidmore attention to the issue of brand equity. 1991). and other proprietary brand assets (Aaker. perceived quality of brand. 2004). Pitta and Katsanis. brand equity consists of four dimensions: brand loyalty. 1993). 1993). One of the most difficult problems faced by advertising agencies. it is relevant to understand what key elements make up brand equity (Punj&Hillyer.H. Advertising effectiveness can be divided into sales effectiveness and communication effectiveness. perceived quality of brand. Donthu and Lee. usually in some meaningful way. attitudinal dispositions. perceived quality. such asfavorableimpressions. Aaker (1991. thereby causing repetitive same-brand or same brand set purchasing. brand awareness." brand associations involving attributes. 39) defines brand loyalty as "the attachment that a customer has to a brand. 1988. top-of-mind awareness." brand loyalty is considered as one of the most important factors affecting consumer choice (Baldinger and Rubinson. p. brand purchase intent. 2011). Kim et al. The brand name provides the memory nodes in consumers' minds (Aaker.2008) Perceived quality is "the consumer's judgment about a product's overall excellence or superiority'' (Zeithaml. Lexus. p. it is important to know how effectively advertisement capture and maintain audience attention and engage viewers (De Ros. Literature review 2. the added value endowed by the brand name (Farquhar et al. 1993. not managers' or experts') subjective evaluations of product quality . about advertisement content. 2008).. or simply whether or not consumers know abouta brand (Keller. both current and potential.webs. Comesan˜a. From a theoretical perspective. NO 5 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS 2. recall. benefits. brand awareness. and brand choice. Sales volume is used to measure sales effectiveness as a gauge. knowledge dominance.sincea strongbrand providesadded value to company's products and makesitdifferent fromits competitors. understood. Brands high in equity such as Microsoft. brand loyalty. To help evaluate whether or not advertising dollars are earning the best return on investment. Keller (1993) depicts attitudes as the most abstract and highest level of brand association. and the level that a message is noticed.Aaker and keller brand equity model has been used which it’s dimensions are. 1996). 2001). or the perceived value of the product in consumers' minds (kimetal.. Brand equity can be thought of as a mix that includes both financial assets and associations. 1996) and Keller (1993). 1991). Brand equity In the past decade. as proposed by Aaker (1991.. Brand associations are central to brand equity. &Brea. 2008). and Citibank have been known to command high degrees of recognition and resulting success (Yoo. and brand associations. Brand awareness refers to whether consumers can recall or recognize a brand. These dimensions are explained in following paragraphs. Brand equity is an important concept in brand management for both theoretical and practical reasons. accepted and is changing attitude and behavior for measuring communication effectiveness (Tsai and Tsai. brand awareness. (2004). remains the issue of measuring the effectiveness of the advertising they create and run (Hall et. Brand equity is the incremental utility gained by a product or service by virtue of its brand name. 1995). and brand associations. In conceptualizing brand equity. 2.109) defines brand associations as "anything linked in memory to a brand'' and brand image as "a set of [brand] associations. 2008). and recalls performance of brands. The communication effect is evaluated by advertisement recognition and advertisement attitude. Advertisement Attitude is constant like and dislikes feelings of audience COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 230 .com SEPTEMBER 2011 VOL 3. perceived quality is considered a core customer based brand equity factor because it has been associated with the willingness to pay a price premium. brand associations. Companies allocate a considerable part of their sources to advertising (activities).ijcrb. Brand awareness precedes building brand equity (Huang and Sarigollu. Advertisement recognition is the recall memory of audience.1. As outlined by Netemeyer et al. p. and advertisers. as well as brand attitude (K. brandloyalty.In this study. Aaker (1991. 2000).''Oliver (1999. and attitudes can be stored in consumers' minds after brand awareness is in their memory(Keller. and behavioral predilections (Rangaswamy et al.2 Advertising effectiveness Advertising plays an important role in today's competitive world by which organizations communicate with their customers. One important consensus among the definitions is that brand equity is the incremental value of a product due to the brand name (Srivastava and Shocker. 1991). 3). 34) defines brand loyalty as "a deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future.The most common definition of perceived quality integrates consumer experience of the service and perceptions of the firm providing the service (Gonza´lez. despite situational influences and marketing efforts having the potential to cause switching behavior. Therefore it is based on consumers' or users' (i.after watching target advertisements. Brand equity has many definitions and forms. Wal-Mart.al. 1991). brand equity can be viewed as the value added to the product (Keller.e. Collectively. Actually.

‐ Persuade customers to purchase the product or brand. we try to investigate the effect of brand equity on advertising effectiveness.webs. when an advertisement can be considered to be effective that lead consumers from the first step to the fourth one.ijcrb. Behavioral Goals mean after watching target advertisements. Su and Huang. evaluation is made on loyalty and growth on positive behavioral potential of involvement of examinees (Chan. 2011). behavioral goals are triggered. Linear models that link related constructs to product purchase have been the most common approach for describing the relationships between attitudinal dimensions of advertising and actual purchase behavior (Young Kim. H4: Brand awareness influences advertisingeffectiveness positively.com VOL 3. According to the model. 2011).al. 2005). H3: Brand association influences advertising effectiveness positively. H2: Brand loyalty influences advertisingeffectiveness positively. The model consists of four steps including attention. and advertising is an external way to lead the customer from one step to another (Petit et. All of advertising campaigns are used to achieve a specific objective. ‐ Inform consumers of the benefits of the product or brand.St. 1993): ‐ Create awareness of a new product or brand. The AIDA model is a progressive way of dividing the fact of purchasing into four levels. NO 5 towards advertisements after watching target advertisements. Conceptual framework of study In this research. 3. interest. The AIDA model was first developed in1898by E. as noted. Conceptual framework of the study COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 231 . H5: Brand equity influences advertising effectiveness positively. with the motive of advertisements. ‐ Create the desire perceptions of the product or brand. Hyeon Hwang and Fesenmaier. According to the conceptual framework and what is mentioned in previous parts thesehypotheses were developed: H1: Perceivedquality influences advertising effectiveness positively. SEPTEMBER 2011 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Studies evaluating the linkage between advertising and sales have evolved from simple linear to multivariate linear models and from static to dynamic demand functions. The conceptual framework of the study is shown in figure 1 to illustrate relationship between variables and conceptual framework. Elmo Lewis (Petit et. The specific objectives of an advertising campaign may adopt many forms such as (Bendixen. then it can interest him (her) to get information about the product's features and create a desire to get benefit from the product. indicating the different maturity levels related to this act (Attention – Interest – Desire – Action). which also means the whole opinion of examinees after watching advertisements. persuade him (her) to buy the product. and finally. ‐ Create a preference for the product or brand. Perceived Quality Brand Loyalty Brand Equity Advertising Effectiveness Brand Association Brand Awareness Figure 1. It means that an advertisement should be able to attract consumer's attention and thereby makes him (her) aware of existence of the product. desire and action. 2010). The AIDA framework is a progressive model enabling the classification of behavioral phases related to the act of purchase.al.

p-value=0. Table 1 addresses the demographic characteristics of the respondents. The questionnaire contains 36 items in which 33 items were assigned to 8 latentvariables (attention.008. and thus the method allows all the interrelationships among the variables to be assessed in the same decision context. All items in the questionnaire are measured by Likert’sfive-point scale. In the past researches the emphasis was placed on how advertising effectiveness can affect brand equity.93. p<0.802 which is in an acceptable range. interest. The correlation matrix of data is shown in table 2. NFI = 0.05). Research methodology In order to collect the required data for the study. 5 items for brand loyalty. The researchpopulation contains allcitizen of Isfahan city who have seen the advertisements of Samsung and Snowa corporations.72. brand awareness)and 3 items to demographics variables.According to what is mentioned. Covariance matrices were analyzed in all cases using LISREL software. First part of questionnaire measures brand equity which contains 16 questions (1 to 16)and second part is assigned to measure advertising effectiveness (17 to 33). p<0. perceived quality was found to influence advertising effectiveness positively (H1: γ 1 =0.Brand loyaltyalso has a positive influence on advertising effectiveness (H2: γ 2 =0.Random sampling method was used to have a sample of 200 respondents. brand association. interest 4 items. A total of 192 usablequestionnaires outof 200 werereturned. a questionnaire was made basedon theoretical framework driven by Aaker and Keller's model for measuring brand equity and the AIDA model for measuring advertising effectiveness. RMSEA= 0. representing suitability of the measures to be used for further analysis. Results Confirmatory Factor Analyses were performed to check the validity of the constructs and to determine the related items.86 calculated by LISREL.96) in z-test. (Bollen.05).12. df= 505. Notably.desire. so brand awareness and brand association can affect (H4:γ 4 =0. SRMR=0. brand loyalty. following results can be extracted: As expected in the first hypothesis. The sample size in this study was 192. Nowadays consumers are the COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 232 .96 (z ≥ 1. The research hypotheses were tested by Structural Equation Analyses (SEM) using LISREL. χ / df= 1. all of the research hypotheses were supported (refer to table 2). action and perceived quality. p<0.77.49. Thereliability of the questionnairewhich is estimatedby The Cronbach’sAlphaCoefficient and it was equal to 0. p<0. all direct and indirect relationships in the model are estimated simultaneously. 6. Conclusion Measuring the advertising effectiveness has been done for over half a century(Hislop. Thus. This circumstantial evidence refers to the proportion of each parameter's coefficient to the standard deviation error of that parameter which will be significant when it is higher than 2 (t ≥2) in t-test and higher than 1. NO 5 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS 4.06. CFA on brand equitywith 16items(5 items for perceived quality.05).0045.webs. Circumstantial evidence t is used to find out if proposed relationships are significant or not. This study focused on investigating the impact of brand equity on advertising effectiveness. Such results provethat the proposed model exhibits a reasonably good fit to the data. 1989). Other results based on LISREL's output are: 2 P-value=0.92.The result indicates chi-square is 856.ijcrb. CFI=0. The structural equation modeling technique enables the simultaneous estimation of multiple regression equations in a single framework. Researchers have recommended that a sample size 100 to 200 is appropriate for Structure Equation Model (SEM) analysis.003.com SEPTEMBER 2011 VOL 3. GFI=0.94.63. RMSEA=0. so SEM analysis could be applied. advertisingeffectivenesspositively. The final analysis was performed based on 192 questionnaires. As degree of freedom is 485. which demonstrates a response rate of 96 percent. 2001). 3 items for brand association and also 3 items for brand awareness)and on advertising effectiveness with 18 items (attention 5 items. desire 5 items and action 4 items) produced the following results: chi-square: 987. The third and fourth hypotheses were confirmed in a same way (H3: γ 3 =0. Figure 2 shows the principal model of research and figure 3illustrates the results of the hypothesis testing.12.48. 5.05).

service or even a new idea. brand awareness and brand associations as the dimensions of brand equity based on Aaker and Keller's model. We considered brand loyalty. Therefore. • Advertising effectiveness can be influenced by this issue that whether or not a brand name is recognized and recalled and known by the consumers.webs. This study provides empirical results for marketers and advertisement designers focusing on the importance of brand equity and this issue that how can it affect advertising effectiveness.ijcrb. the more effective designed advertisement. The conceptual model of the research was developed based on proposed hypotheses using structural equation modeling and was found suitable according toLISREL's output. 1995). The question of how advertising affects consumer behavior represents one of the most complex and intriguing aspects of understanding in marketing (Meenaghan. Previous researches have focused on the impact of advertising effectiveness on brand equity. • In the same way it is confirmed that perceived quality which is consumer's judgments about a product's overall excellence or superiority affects advertising effectiveness positively. marketers are interested to know if their attempts are achieving the established objectives or not. • Finally. 1995). and attitudes stored in consumers' minds driven by brand awareness which is known as brand associations can influence the effectiveness of a company's advertisements positively. In accordance with the results all of the proposed correlations were found statistically significant. We also used the AIDA model to measure advertising effectiveness. Given the fact that the brand represents for the consumer a specific articulation of product performance attributes and advertising represents a most potent source of brand identity (Meenaghan. The higher the levels of brand awareness. perceived quality.com VOL 3. the main conclusions based on the data analysis are presented: • Consumer's commitment to rebuy or patronize a preferred product/service driven by brand equity which is called brand loyalty can influence advertising effectiveness. benefits. Factor analyze was used to find out the validity of the questionnaires and the outputs were subsidiary.On the other hand companies spend enormous financial and human sources to be known and preferred by consumers. In other words. SEPTEMBER 2011 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 233 . it would be worthy for the companies and researchers to investigate the correlations between these concepts and benefit it's operational consequences. brand image including attributes. 2005) provides an image from the company in consumer's mind which can influence this desirable effectiveness. The idea proposed in this study is that brand equity as a relational market-based asset(Ballester and Alema´n. NO 5 target of countless ads trying to attract their attention to a specific product.

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Principal model of research COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 236 .webs.ijcrb.com SEPTEMBER 2011 VOL 3. NO 5 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Annexure Figure 2.

Sample demographic characteristics Frequency 115 73 Frequency 122 31 23 10 Frequency 14 45 70 60 Percent 59.9 38 Percent 63.5 31.5 16.ijcrb.2 Percent 7.3 23. NO 5 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Figure 3.D Table 1.Model of adjusted index of T Gender Female Male Age 21-30 31-40 41-50 More than 50 Educational status High school Diploma Bachelors Masters &Ph.webs.1 12 5.2 COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 237 .4 36.com SEPTEMBER 2011 VOL 3.

webs.fit indicate Internal goodness-of fit perceived quality brand loyalty brand awareness brand association External goodness-of fit GFI RMSEA CFI NFI SRMR 0.72* 0.003 0.ijcrb.93 0. GFI = goodness of fit index. SRMR = standardized root mean square residual.11 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Goodness-of.0045 Notes: CFI =comparative fit index.7 6. Table 2 : analysis of results COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 238 .05. RMSEA = root mean square error ofapproximation.49* 0.com SEPTEMBER 2011 VOL 3.8 2.48* 0. NO 5 Coefficient Advertising effectiveness Advertising effectiveness Advertising effectiveness Advertising effectiveness 0.63* T-value 2. * p< 0.7 4.92 0.94 0.