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Running head: BRAND EQUITY & CONSUMER LOYALTY

BRAND EQUITY & ITS EFFECT ON CONSUMER LOYALTY A Thesis Submitted to Lahore School of Economics

By

Amna Zaidi

For Zehra Raza

Award of Degree of Bachelors of Business Administration (Honors) in Finance

Session: 2009 to 2013

BRAND EQUITY & CONSUMER LOYALTY

RESEARCH COMPLETION CERTIFICATE


Certified that Amna Zaidi, id No. 09U0460 Session 2009 to 2013 has carried out and completed the research project entitled Brand Equity and its effect on Consumer Loyalty under my supervision for requirement for the award of Degree of Bachelor of business Administration Honors (Majors) by Lahore School of Economics. Research supervisor

(Zehra Raza) Lahore School of Economics

BRAND EQUITY & CONSUMER LOYALTY

TABLE OF CONTENT
ACKNOWLEDGEMENT.................................................................................................. 4 ABSTRACT ........................................................................................................................5 TABLE OF CONTENT...................................................................................................... 3 CHAPTER 1: INTRODUCTION........................................................................................6 CHAPTER 2: LITERATURE REVIEW...........................................................................10 CHAPTER 3: METHODOLOGY.....................................................................................21 CHAPTER 4: RESULTS AND ANALYSIS....................................................................25 CONCLUSION......................................................................37 REFERENCES..................................................................................................................38 APPENDICES...................................................................................................................40

BRAND EQUITY & CONSUMER LOYALTY

Acknowledgements I am most thankful to God Almighty who provided me the opportunity to be part of this academic organization and to carry out this research. Also, special thanks to my instructor, Ms. Zehra Raza, without whose constant guidance, understanding, and support this would not have been possible at all. I also wish to express my gratitude towards my friends and family who supported me through it all.

BRAND EQUITY & CONSUMER LOYALTY

Abstract This research paper is on the topic Brand equity & its effect on consumer loyalty. The aim of this study was to analyze the factors than effect brand equity which in turn impacts consumer loyalty. A survey was conducted in which 100 questionnaires were floated among students of Lahore School of Economics, Lahore University of Management Sciences, and Beaconhouse National University. The data was analyzed with SPSS software and the results of this study highlight a positive correlation with the selected variables.

Key Words: brand loyalty, brand image, promotional activities, endorsements, advertisements.

BRAND EQUITY & CONSUMER LOYALTY Chapter 1 INTRODUCTION

Overview of the topic A brand is a name, icon or sign through which the source of a product may be

identified. This is an extremely vital part of developing a product as it can add significant value if it has been placed in the minds of consumers positively and is well recognized. Brands epitomize immensely valuable entities of legal property and are capable of influencing consumer behavior. They can also be purchased and sold, and provide the confidence of continual returns streams in the future for their owner. This direct or indirect value derived from the brand is referred to as brand equity (Kapferer, 2005). A basic distinction of brand equity is that is an intangible asset which provides added value to its owner. It is reflected not by feedback for a particular product but rather depicted through the thoughts, actions, words, experiences, and beliefs of the consumers. In a global market that facilitates numerous products and competition for the consumers and producers respectively, it is very common for a large number of products to have similar attributes despite being produced by different companies. In spite of that, consumers tend to be specific in terms of the producers, or rather their brand. This is because brands are no longer a means of differentiation but rather a means to justify purchasing decisions as well (Alamgir et al., 2003).

Background of the topic In this day and age when capitalism has become a way of life to the extent that it

influences the values people have, the education and careers they pursue, and even alter

BRAND EQUITY & CONSUMER LOYALTY their societal functioning, competition among firms that feed these capitalistic urges is now higher than ever before. Firms not only need to realize exactly what it is that the consumers want in terms of products and services but also should be able to determine all the factors that make consumers choose one provider over another. It is due to this reason that I chose brand equity as the focal point of my research and then analysed certain factors that brand equity is influenced from.

Importance of study with respect to target population

The target population selected were students from universities. The purpose behind this particular demographic section was because the mean age in Pakistan as of now is 21. The prior assumption that teenagers and post-teens do not possess enough purchasing power to justify directing marketing efforts towards them is now being dispelled. It is in fact people falling in this age group that constitute the major percentage of spenders in our economy so it becomes essential for all firms to realize what influences these people the most so that they can better their marketing campaigns and successfully translate them into increasing sales.

Importance of study with respect to the world

Since brand equity is an extremely beneficial but intangible asset, it is important for organizations to try to quantify it so that it can provide assistance with strategic and

BRAND EQUITY & CONSUMER LOYALTY marketing decisions and help identify the sources of brand equity and what components are affected by it, for example sales or consumer purchase decisions. The value of brand equity is eventually derived in the marketplace from the words and activities of consumers. Consumers decide through their purchases, based on whatever factors those are important to them, which brands have more equity than other brands. Customer based brand equity is the effect that a consumer brand knowledge has on responses of consumers to brand marketing activity. However, it is important to understand that brand knowledge does not refer to the facts pertaining to the brand but rather the perceptions, thoughts, and feelings that consumers associate with the brand (Keller, 2003). The indirect approach towards measuring brand equity entails measuring consumer mindset or brand knowledge. This helps in identifying aspects of the brand knowledge which cause the differential effect whereas the direct approach caters to measuring brand performance. This relates to the ways in which the product or service attempts to meet customers' more functional needs. Therefore, brand performance refers to the intrinsic properties of the brand in terms of integral product or service characteristics such as objective assessments of quality and satisfaction of utilitarian, aesthetic, and economic customer needs and wants. To measure brand equity, a brand equity measurement system is used. It is a set of research procedures that is designed to ensure that all marketers can have access to correct and actionable information in a timely manner for their brands so that they can make the best possible tactical decisions in the short-run and strategic decisions in the long run. The goal in developing a brand equity measurement system is to be able to

BRAND EQUITY & CONSUMER LOYALTY achieve a full understanding of the sources and outcomes of brand equity and be able to, as much as possible, understand the relationship between the two. Ideally speaking, the brand equity measurement method would provide the latest information that is most

relevant related to the brand and all its competitors to relevant decision-makers within the organization. Successful brand management demands an acute understanding of exactly how consumers think, feel, and act towards brands. Therefore, it is understandable that brand equity plays a crucial part is customer retention and establishing and maintaining customer loyalty (Hansen, 2003).

Research Question What factors effecting brand equity impact upon the consumer buying processes?

BRAND EQUITY & CONSUMER LOYALTY Chapter 2 LITERATURE REVIEW

The literature review will set the framework for and appraise the study by scrutinizing previous research on this topic. The aim of the literature review is to assess the existing literature on the association of customer loyalty and brand equity.

Tulin Erdem Joffre Swait (2008) conducted a study to determine whether brand equity could be used as a signaling phenomenon or not. This study developed an economic outlook on the value attributed to various brands by consumers. The proposed signaling viewpoint clearly considered the flawed and unequal information structure of the market. It motivated the role of credibility as the main determinant of consumer based brand equity. The results were consistent with the proposed relations embodied in the signaling perspective on brand equity.

Kannan Sirivisan (2009) conducted a study regarding the effects of marketing inputs on brand choice. The main reason for conducting this research was to evaluate how a consumer makes a choice regarding the brand based on the pricing, promotion and other activities. In order to conduct this research, a multistate evaluation model was built to measure the consumers extent of evaluation about a brand on some purchase occasions. The research made use of scanner data to analyze consumer behavior about a product. The scanner data consisted of data from the ketchup industry. The most popular brand in the ketchup industry is Heinz and in this research, as proposed by Little (1993) they treated brand-size as a different combination. They took data from 225 households that had purchased at least 10 ketchup bottles in a 2 year time period. 150 of these households 10

BRAND EQUITY & CONSUMER LOYALTY were kept as estimation while the rest of the 75 households were kept for prediction purposes. The results from this research conducted that only 59-69% of the consumers made evaluation regarding their purchases. This means that 40% of the purchases were made based on intrinsic brand preferences. The research also found a substantial difference between short term and long term loyalties. When consumers are actively involved in evaluating the brand they place greater emphasis on previous purchases. Furthermore the study also found differences in evaluation of a brand based on whether the purchase was made on a weekday or a weekend. The study found that consumers that purchased any brand on weekdays were less likely to spend their time on evaluation. The research also found that 40% of the time, marketing activities has no influence on the purchase decision, however 60% of the time their purchase is based highly on how well the brand has marketed themselves. To understand this, the study presented a cross price elasticity of different types of evaluation segments of consumers. The results conducted that those who spend great time on evaluating the product responded to marketing activities 4 times more than the low evaluation segments.

Arjun Chaudhuri and Morris B. Holbrook (2001) conducted a study where they studied purchase loyalty & attitudinal loyalty; two facets of brand loyalty, as connecting variables in the series of effects such as brand affect, brand trust, and brand performance. The model included product-level classification, interrelated controls and brand-level controls. The authors collected a grouped data set for 107 brands from three separate surveys of brand managers and consumers. According to the results, brand trust an brand effect collectively determined purchase & attitudinal loyalty when product & brand level variables were controlled for. However, purchase loyalty was observed to lead to 11

BRAND EQUITY & CONSUMER LOYALTY increased market share whereas attitudinal loyalties lead to a greater relative price for the brand. These results were also discussed by the authors with managerial inferences in mind.

James M. Lattin (2002) led a study to find out the effects of promotional events on behavioral brand choice. The aim of this study was to help managers understand the link between pricing and promotional activities and how these activities affect consumer behavior. Although a lot of research has been conducted on this area, the main concern is regarding the long-run implications of these activities. The model to conduct this research was based on the ground that consumers have certain expectations about the marketing activity of a brand based on their past experiences. The study also assumed that consumers use these reference points for evaluating the brand. The study also suggested that the promotional activities carried out by a brand increased the customers attraction towards the product and hence enhanced the customers evaluation of the brand. This study suggested a threshold model of PRP formation which is determined by the consumers level of exposure to a brand at the time of purchase. At low levels of exposure, PRP equals to 0 and at high levels of exposure, PRP equals to 1. This model was joined with the IRI scanner data. The research identified the items that were purchased most frequently. This data used items purchased and used over a 75 week period. Furthermore they combined items of the same size and price together. The study revealed quiet interesting results, it showed that brand loyalty is positive in case of idiosyncratic preference and it also showed that prior purchase of a product is also a strong and positive indicator of the idiosyncratic preference. The results depicted that for low levels of prices, non-promoted brands have higher response and that promotion is 12

BRAND EQUITY & CONSUMER LOYALTY considered to be more effective when the brand has a higher price. In conclusion it can be said that increases in the features and displays of a product increase the consumer purchase. Furthermore it should be kept in mind that increase in the brand choice does not mean that the brand will have increased sales. The sales before and after any promotional activity are not only dependent on the brand choice but also on the change in the mix of household consumption in that particular market. This research provided evidence to support the theory that consumers frequently exposed to promotional activities form expectations about the brand that will be used as reference points in evaluating the brand in the future. Joseph W. Alba and Stijn M. J. Van Osselaer (2000) conducted a succession of experimentations that illustrated a method for learning that upgraded brand equity with the help of product characteristics that help determines its quality. When the relationship between product quality and brand name was known before the association between product attributes and quality was shaped, perception about quality was likely to suffer. The singularity was noted to be strong; however its impact was sensitive to related deviations in the learning surroundings. The tests conducted were unreliable with respect to customary models of causal rationale. Nonetheless, they asserted that the associative learning models depicted beginners as fundamentally forward looking. Alexander C. Onukwugha (2011) examined the relationship between product branding and purchase decision. Investigation centered on the various effects of product branding on the purchase decisions of automotive users, using Honda Accord and Toyota Camry who bought their sedans within the past three years from the date the research was conducted. Owners of Honda and Toyota cars served as the participants in the study to 13

BRAND EQUITY & CONSUMER LOYALTY provide a realistic framework for answering this research question. The research design was cross-sectional because the participants completed the survey at a single point in time. The design was quantitative because the purpose of the present study was observation of the relationships amongst numeric variables. An online survey was conducted. The respondents were sampled randomly and were randomly screened from across the United States. The researcher interviewed approximately 600 respondents before selecting 118 qualified respondents. The researcher screened out 394 respondents because they were not qualified to participate in the survey. The result of the

investigation indicated a positive correlation between product brand and purchase decision. V. S. Rinivasan and Chans U. Parka (2004) developed a new method that essentially followed the survey design. The purpose of this method was to understand and quantify a particular brands equity in a certain product category, and to also evaluate the equity of a brands extension in a different product category. They used brand equity, as defined by the customer, as the extra value awarded to the product by the brand. To measure brand equity, they took the difference between a single consumers overall partiality and his preference based on rationally assessed product characteristics. They further classified brand equity into two types: attribute and non-attribute based constituents. According to this method, a brand was rewarded with both market share and price premium because of strong brand equity. The findings were then applied to toothpaste and mouthwash categories that depicted that the suggested approach was both valid and reliable. Jyh-ShenChiou and Lee-Yun Pan (2008) studied how social, cultural, and political beliefs affect the ethical values of consumers regarding consumption patterns. They used social 14

BRAND EQUITY & CONSUMER LOYALTY Darwinism perception, status consciousness, cultural orientation, and perceived trust of people as their variables. A sample of undergraduate students from Taipei, Taiwan was used for the conduction of a field survey. To ensure that the sample was socially and economically diverse, 10 private universities, whose locations were nationally spread, were selected. Each respondent was given a questionnaire with seven parts. The studys findings indicated that consumers who had low ethical beliefs were likely to be more status conscious and had a higher opinion of social Darwinism as compared to those consumers who had moderate to high ethical values. Furthermore, the results also highlighted that consumers with moderate ethical beliefs had greater trust on people as compared to those who had low ethical values. Moreover, it was consumers who had high ethical beliefs who had significantly greater insight of vertical collectivism. Kevin L. Keller (2000) presented a theoretical model for brand equity from the stand point of a single consumer. They defined customer based brand equity as the differential effect of brand knowledge on consumer response to the marketing of the brand. Positive customer based brand equity was found to be a result of consumers reacting more favorably to a certain component of the marketing mix for a particular brand than they did to the same component for a product or service by an unidentified or unreal brand. An associative memory network was used to theoretically explain brand knowledge; and it was branched into two parts: brand image and brand awareness. The occurrence of customer based brand equity was noted to coincide with times when the customer maintained a strong, positive and distinctive association of the brand. France Leclerc and Laurette Dub (2004) conducted three experiments to inspect the concept of whether or not whether foreign branding and the practice of articulating and/or 15

BRAND EQUITY & CONSUMER LOYALTY spelling a brand name in a foreign language prompted cultural stereotypes and how it impacted upon attitudes of consumers and their perceptions about such products. They conducted two experiments, with a different methodology for each. For experiment 1 forty undergraduates were asked to form impressions of six products whose brand names they heard on a tape. In the first experiment, French brands were selected as a definite case. They found that pronouncing names with a French dialect triggered hedonism as a perception of the product and the brand itself. The second experiment had a sample size of 184 students who were enrolled in two marketing classes, and they were asked to rate nine advertisements. Findings of experiment 2 helped them determine that when French branding was paired with corresponding information of a customers original country, the impact was in fact negative. The third experiment involved a product testing. Forty-two subjects were assigned randomly to the four cells according to a 2 (French/English) X 2 (taste test/no taste test) between-subjects experimental design. According to the results, even exposure to direct sensory involvement, the effects of French branding were not diminished. Overall results of the three experiments indicated that brand attitudes for the utilitarian and hybrid product categories did not significantly differ for French, English, and no brand names. However, attitudes toward hedonic products were more positive for brands whose names were spelled in French. Demetrios Vakratsas and Tim Ambler (2001) aimed at understanding advertising effects on brand choice which were divided into intermediate and behavioral effects. Impact of advertising on consumer values and attitudes was an example of intermediate effects, whereas effects related to purchasing behavior was an example of behavioral effects. A framework was developed to cater to market response model which related advertising, 16

BRAND EQUITY & CONSUMER LOYALTY price, and promotional measures directly to purchasing behavior. Market response model, cognitive information model and a pure response model were developed to evaluate the effects of advertising. Questionnaires were not used instead focus groups were the means of primary information. The results highlighted that emotions play an integral part in attitude formation towards brands and are not only dependent on a consumers values or product characteristics. A consumers attitude towards an advertisement was also likely to extend towards the brand as well.

Dr. Giridhar K.V. (2012) conducted a research the purpose of which was to review the impact celebrity endorsement had on consumers in India. The study focused on the use of celebrity endorsement for marketing durable products. The sample size was 50 and the respondents were chose across various socio-economic groups. Structured questionnaires were filled by these respondents. The findings of the study helped establish that validation from a celebrity went a long way in creating brand awareness and made product recall a lot easier and likely for the consumers. Moreover, since the products under question were durable in nature, it was found that the motivation to buy a certain product was triggered by either need or product utility. Therefore, to have a celebrity talk about product characteristics was more convincing for the consumers and more likely to help materialize the purchase.

Birger Wernerfelt (2001) discussed brand loyalty in two aspects. The brand loyalty that was a result of time intervals was coined as inertial brand loyalty whereas the result of relationship between past, present and future utility of a product created cost -based brand loyalty. A continuous time model was used to develop market level insinuations. Results showed that while inertial brand loyalty caused equilibrium with price diffusion, cost based brand loyalty catered to unitary price equilibrium. With the absence of brand 17

BRAND EQUITY & CONSUMER LOYALTY loyalty, differences in trading prices and prices attained without any brand loyalty were also eliminated. The proposed theory that market share and performance were positively correlated was supported by the findings. It was also deduced that market share was also an asset. Richard P. Bagozzi (2003) attempted to derive and illustrate a new, holistic methodology for modeling consumer choice processes and show how the approach can be meaningfully integrated with managerial decisions related to the design and introduction of new products and services. Prior to answering this question, the researchers started the process by beginning with the measurement of consumer perceptions followed by a compaction phase consisting of the representation of how consumers combine perceptions with internal standards to arrive at overall evaluations of products and their features. This information, in turn, was used to divide consumers into homogeneous segments and to predict their actual choices. Because this study aimed at finding what causes people to go for innovative products and finally the perceptions and attitude they form towards the product, no questionnaires were used rather new methods were applied such as the holistic methodology and exploratory methods . The findings revealed that some consumers do not comprehend the physical and psychological consequences of a purchase rather they fail to develop well-formed attitudinal reactions at all. Their responses are limited to global and more surface affective reactions. Renee Ann Richardson Gosline (2009) talked about how different products could be used to tell about what class one belongs to. It stated that the tastes one exhibits in public, the brand of car one drives, the handbag one carries, and even the books on ones shelves can be interpreted by others as information about ones status. For this reason, consumers 18

BRAND EQUITY & CONSUMER LOYALTY often prefer fake brands which also transmit positive image. The user may experience the benefits of high status symbols, while ostensibly bypassing any economic barriers to entry. Method of collecting data on consumption that are not plainly accessible through experiments, surveys, or database modeling so qualitative data was preferred. Reason was the quick feedback and social interaction that consumers experience in their personal networks. The goal was to understand how social embeddedness impacts the ways that consumers ascribe meaning to things. Personal observations of over 40 transactions where consumers requested copies of certain brands by name were done. Results showed emitted a positive image about their personality. Judith A.Garretson (2005) talked about how spokes characters have been created as a symbol of brand sign and how they can convey a specific brand attitude. The aim of this research was to identify ways in which these character icons can benefit brands, these benefits do not refrain to the mere recognition of the brand, but they go beyond that. This research also addressed the benefits of featuring more spokes characters rather than less of them. It also studied the effects of how strategies when they are used at more than just one point of the consumer contact can enhance or even undermine the campaign outcomes. An elaborative likelihood model (ELM) was used to analyze how consumers view and then process a particular advertisement. This study predicted a three way interaction between goals, relevancy and thirdly, package cues. The following hypothesis was built; when bran relevant spokes characters were used as package cues, it resulted in improved memory and if verbal attribute package cues were used, brand claim recognition was moderately affected by processing goals. To test the hypothesis participants were randomly assigned to the experimental conditions. In the first stage the 19

BRAND EQUITY & CONSUMER LOYALTY participants were exposed to an ad stimulus in order to manipulate the processing goals of the participant. In the second stage a distraction was provided so as to clear the participants short-term memory (STM). In the third and last stage the package cue was manipulated by showing the participants a mockup for the product that was being advertised. A seven point scale item staring from definitely true to definitely not true measured the participants recognition of each target advertisement. The results were similar to those that had been predicted, brand processors have greater recognition of the brand claims when more applicable characters are used on the product package as cues. The results also showed that spokes characters offer more than just brand recognition, they can help improve the consumers memory and therefore their evaluation of the brand. Therefore marketers must make use of spokes characters that are relevant so that consumers can perceive them as conveying a message about a particular brand and it can also increase the consumers involvement in a brand.

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BRAND EQUITY & CONSUMER LOYALTY Chapter 3 METHODOLOGY Research type: A cross-sectional, quantitative and qualitative research design was employed in the current study. This was because the participants completed the survey at a single point in time. The design is a combination of qualitative and quantitative because the goal of the current study is to examine the effects of brand equity on consumer loyalty and the numerical data is to be substantiated with theoretical framework. Data type and research: In the process of data collection, information about individuals who purchase branded items and to what extent their buying decisions are effected by their brand knowledge was gathered. Secondary data was also used. The research period was from November 2012 till April 2013. Sources of data: To constitute secondary data, internet, previously published surveys, online journals, and newspapers were used among which were Jstor, Sciencedirect, ProQuest, and Google Scholar. Libraries and their databases were also accessed. For primary data, questionnaires were given out to students of Lahore School of Economics, Beaconhouse National University, and Lahore University of Management Sciences. Population and planned sample: The population of interest in the current study consisted of students of Lahore School of Economics, Beaconhouse National University, and Lahore University of Management Sciences who used branded items. The targeted respondents were buyers who have bought their branded items within the past two years till the date the research was conducted. The reason for this preference of buyers was to enable the derived responses to be current and dependable. The sample size was 100. 21

BRAND EQUITY & CONSUMER LOYALTY Research Hypothesis The five hypotheses were: H0: Endorsements do not lead to higher brand equity H1: Endorsements do lead to higher brand equity

H20: Advertising is a strong determinant of brand equity H2: Advertising is not a strong determinant of brand equity

H30: Higher brand loyalty does not lead to higher brand equity H3: Higher the brand loyalty higher will be the brand equity

H40: A strong brand image is negatively proportional to brand equity H4: A strong brand image is positively proportional to brand equity

H50: Promotional activities do not affect brand equity H5: Promotional activities positively enhance brand equity

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BRAND EQUITY & CONSUMER LOYALTY Techniques: The technique used for carrying out the research were cross tabulation as this was a consumer research and this technique allowed the comparison of interrelations of the variables. Moreover, SPSS (Statistical software) was also used. Data analysis: Both descriptive and inferential statistical analyses for the present study were performed. This study also conducted inferential analyses to test the three hypotheses of the current study. All inferential tests were conducted in SPSS. Graphs and tables were used to represent the results. Data interpretation: The results generated from SPSS were compiled and were analyzed using the tables, graphs and regression results.

Theoretical Framework

Independent Variables Advertisements

Dependent Variable

Promotional Activities BRAND Endorsements

EQUITY
Brand Image

Brand Loyalty

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BRAND EQUITY & CONSUMER LOYALTY Operational Definitions VARIABLES REFERENCES Malik, F. (2005). Price Promotional activities include sales Determinants in promotion, merchandising, personal Promotional Activities selling, exhibitions, advertising and Success. DSM Business public relations. Review Vol 2. Deeply held commitment to a rebuy Ha, H and Park, K. (2012). or repatronize a preferred Effects of Perceived Quality product/service consistently in the & Satisfaction on Brand future thereby causing repetitive Loyalty in China: The same brand or same brand-set moderating effect of purchasing, despite situational customer orientation. influences and marketing efforts African Journal of Business having the potential to cause Management. 6, 22, 6745 switching behavior. 6753. Michael, A. (2000). MatchSymbolic, aspirational reference up Hypothesis in Celebrity group association of people Advertising: When Beauty including the typical consumer, the Maybe Only Skin Deep. product class expert, the company Journal of Advertising, 19, president, and the celebrity. 4-13. Defined as marketing effects or outcomes that accrue to a product Zhu, J. (2009). Three Essays given its brand name compared on Brand Equity. University with those that would accrue if the of Iowa Research Online: same product does not have the Theses & dissertations brand name. Contents capturing attention, De Ros, M. (2008). A creating brand awareness or Content Analysis of product knowledge, motivating Television Ads: Does consumer behavior, and Current Practice Maximize remembering information. Cognitive Processing. OPERATIONAL DEFINITIONS

Promotional Activity

Brand Loyalty

Endorsements

Brand Image

Advertisements

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BRAND EQUITY & CONSUMER LOYALTY Chapter 4 RESULTS AND ANALYSIS Cross Tabulations

Table 1: Cross tab for Endorsements1: You are likely to buy products endorsed by your favorite celebrities. * Endorsements2: Celebrities can affect your perception about branded items.

Endorsements2 SDA Endorsements1 S.Disagree Disagree Neutral Agree S.Agree Total 1 2 0 0 0 3 D 0 11 14 1 0 26 N 3 7 11 7 1 29 A 0 1 18 14 2 35 SA 0 0 4 2 1 7

Total 1.00 4 21 47 24 4 100

H0: Endorsements do not lead to higher brand equity H1: Endorsements do lead to higher brand equity Lickert scales were used to gauge the opinions of respondents about various aspects that they think influence brand equity and in turn impact upon consumer loyalty too. Endorsemnets1 represented the statement You are likely to buy products endorsed from your favorite celebrities, whereas Endorsements2 represented the statement Celebrities 25

BRAND EQUITY & CONSUMER LOYALTY can affect your perception about branded items. I selected these statements as representative of the variable Endorsements because not only do these questions help highlight the impact celebrities have on the mind of the potential consumer, but Endorsements1 also attempts to identify the extent to which the change in perception because of celebrity endorsement, can also result in changes in actual purchases. The table above shows cross tabulations of data gathered through a survey that was conducted. 18% of the respondents expressed neutrality when asked about whether or not celebrity endorsement effected their purchase decision but agreed when asked if celebrities can affect their perceptions about branded items. 14% of the respondents marked neutral when asked if their purchase decision would vary in favor of products being endorsed by their favorite celebrities, but at the same time, these respondents agreed that celebrities can affect peoples perceptions about branded items. Another 14% of the respondents who expressed neutrality to Endorsement1 statement also disagreed with Endorsements2 statement i.e. not being of the beliefs that celebrities alter perceptions about branded items. 11% of the respondents expressed neutrality with both statements whereas a similar percentage of respondents also disagreed with both statements as well. These results are consistent with the review I carried out of the existing literature on this subject. Ghiridhar (2012) conducted a study that whose findings stated that when the focus is on target and price, celebrity endorsement was a significant inducer and can even affect purchase attitude.

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BRAND EQUITY & CONSUMER LOYALTY In light of the analysis above, I thus accept H1: Endorsements do lead to higher brand equity. Table 2: Cross tab for Advertisements1: Do you think advertisements play a vital role in inducing people to buy what they think they should buy? * Advertisements3: Sometimes, when you buy a product, it is because you recall its advertisement. Adverts3 SDA Adverts 1 Disagree Neutral Agree S.Agree Total S.Disagree 1 0 0 0 0 1 D 0 0 1 11 5 17 N 0 0 6 17 3 26 A 2 1 2 20 21 46 SA 2 0 0 3 5 10 Total 1.00 5 1 9 51 34 100

H20: Advertising is not a strong determinant of brand equity H2: Advertising is a strong determinant of brand equity Advertisements1 represented the statement Do you think advertisements play a vital role in inducing people to buy what they think they should buy? and Advertisements3 represented the statement Sometimes, when you buy a product, it is because you recall its advertisement. These questions were selected as representative of the variable Advertisements because they helped me determine what respondents thought regarding advertisements extent of influencing purchase decisions and whether or not recalling an advert had any impact on the likelihood of a consumer purchasing a certain product.

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BRAND EQUITY & CONSUMER LOYALTY The table above shows that 21% of the respondents who agreed with the statement that sometimes when they bought a product it was because they recalled its advert and they also strongly agreed with the statement that advertisements played a vital role in inducing people to buy products they thought they should buy. Another 20% of the respondents agreed with both statements mentioned above.

In light of the findings generated through the survey, it is evident that the majority of the respondents that advertisements are a strong determinant of brand equity. This is consistent with the literature on this subject. Assadourian (2010) stated that advertisements have proven to be strong cultural tools to persuade people to buy certain products. Therefore, I will accept H2: Advertising is a strong determinant of brand equity. Table 3: Cross tab for BrandImage1: Consumers employ a heuristic (decision rule) to buy only familiar, well-established brands. * BrandImage2: When buying a product, it is important to you that your friends recognize the brand name.

BrandImage2 SDA BrandImage1 S.Disagree Disagree Neutral Agree S.Agree Total 0 2 3 4 0 9 D 2 8 6 15 2 33 N 1 1 10 12 1 25 A 1 1 15 11 3 31 SA 0 0 0 1 1 2

Total 1.00 4 12 34 43 7 100

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BRAND EQUITY & CONSUMER LOYALTY H40: A strong brand image is negatively proportional to brand equity H4: A strong brand image is positively proportional to brand equity BrandImage1 represented the statement Consumers employ a heuristic (decision rule) to buy only familiar, well-established brands whereas BrandImage2 represented the statement When buying a product, it is important to you that your friends recognize the brand name. The reason for selecting these questions as demonstrative of the variable Brand Image was because they helped me find out whether or not it was important for customers to buy products from familiar, well-known brands and if they attributed any importance to recognition of such purchase decisions by their friends. The table above shows that 15% of the respondents while holding a neutral stance when asked if consumer employed heuristics to buy well-established brands, also agreed that whether or not their friends recognized the brand name was an important factor during the purchase decision. Another 15% of the respondents agreed that consumers used decision rules to buy familiar brands but disagreed with the BrandImage2 statement i.e. it was not important to them whether or not their friends recognized the brand name they bought. However it is important to note that 43% agreed and 7% strongly agreed (total of 50%) with BrandImage1: Consumers employ a heuristic (decision rule) to buy only familiar, well-established brands and 31% agreed and 2% strongly agreed (total of 33%) with BrandImage2: When buying a product, it is important to you that your friends recognize the brand name. These positive responses are in accordance with the literature review

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BRAND EQUITY & CONSUMER LOYALTY that was conducted. Thus, the hypothesis H4: A strong brand image is positively proportional to brand equity will be accepted.

Table 4: Cross tab for BrandLoyalty1: You are likely to make consistent purchases from a preferred brand. * BrandLoyalty2: If you are loyal to a brand, your product choice will not be affected by factors such as convenience and/or price. BrandLoyalty2 SDA BrandLoyalty1 S.Disagree Disagree Neutral Agree S.Agree Total 0 0 2 6 0 8 D 1 5 1 11 1 19 N 0 2 6 17 3 28 A 1 2 3 24 3 33 SA 0 0 2 7 3 12 Total 1.00 2 9 14 65 10 100

H30: Higher brand loyalty does not lead to higher brand equity H3: Higher the brand loyalty higher will be the brand equity

BrandLoyalty1 represented the statement You are likely to make consistent purchases from a preferred brand and BrandLoyalty2 represented the statement If you are loyal to a brand, your product choice will not be affected by factors such as convenience and/or price. The first statement was used because it helped me determine the consistency of purchases for preferred brands, and even if there was one. The second statement helped me gauge the extent to which this preference lasted and whether price/convenience

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BRAND EQUITY & CONSUMER LOYALTY altered the purchase decision. Due to these reasons, these questions were used as primary indicators of the variable Brand Loyalty. The table above depicts the cross tabulation of the above stated questions. It can be noted that 24% of the respondents who agreed their purchase decision would not vary due to factors such as price and/or convenience also agreed that they were likely to make steady purchases from a favored brand. Another 17% of the respondents, while maintaining a neutral stance in response to the question If you are loyal to a brand, your product choice will not be affected by factors such as convenience and/or price, agreed that their purchases were consistent in terms of the brand they bought. The findings are consistent with the literature review I carried out. Emari (2012) asserted brand loyalty as a mediating factor in creating brand equity. Therefore, the hypothesis H 3 that states Higher the brand loyalty, higher will be the brand equity will be accepted.

Table 5: Cross tab for PromotionalActivity1: Involvement of a brand in social causes tends to influence your purchase decision positively. * PromotionalActivity2: Promotional activities such as sponsored social events of free samples will influence your purchase decision positively.

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BRAND EQUITY & CONSUMER LOYALTY PromotionalActivity2 SDA PromotionalActivity 1 Disagree Neutral Agree S.Agree Total S.Disagree 1 1 0 0 3 5 D 1 6 5 3 0 15 N 1 5 14 13 2 35 A 1 5 9 18 3 36 SA 0 0 2 3 4 9 Total 1.00 4 17 30 37 12 100

H50: Promotional activities do not affect brand equity H5: Promotional activities positively enhance brand equity

PromotionalActivity1 represented the statement Involvement of a brand in social causes tends to influence your purchase decision positively whereas PromotionalActivity2 represented the statement Promotional activities such as sponsored social events of free samples will influence your purchase decision positively. The purpose of these questions was to measure the effect of Promotional Activities as a variable on brand equity. The tables above shows cross tabulations for these questions. There were 18% respondents who agreed with both statements i.e. promotional activities such as free samples and involvement of the brand in social causes was likely to influence their behavior positively. Another 14% of the respondents held a neutral stance for both questions. However, it is vital to note that 37% agreed and 12% strongly agreed (total of 49%) with PromotionalActivity1: Involvement of a brand in social causes tends to influence your purchase decision positively and 36% agreed and 9% strongly agreed 32

BRAND EQUITY & CONSUMER LOYALTY (total of 45%) with PromotionalActivity2: Promotional activities such as sponsored social events of free samples will influence your purchase decision positively. These positive responses are in accordance with the literature review that was conducted. Lattin (2003) conducted a study whose findings indicated that formed future expectations based on promotional activities and these expectations affected brand choice. Thus, H5: Promotional activities positively enhance brand equity will be accepted. Frequency Tables

Table 6 (Appendix B) depicts the data of the question Endorsements2: Celebrities can affect your perception about branded items, and is directly related to the dependent variable i.e. brand equity and is therefore a more accurate indicator of endorsements influence as an independent variable. It can be seen that 35% of the respondents, who also constituted as the major portion, agreed with the statement that celebrities can affect branded items perceptions with an additional 7% respondents strongly agreeing with this statement as well. Table 7 (Appendix B) shows the frequency for question Adverts2 Do you think advertisements have framed the minds of consumers to buy branded items? When the respondents were asked the above mentioned question, 44% agreed and 33% strongly agreed with that notion that advertisements have framed the minds of the consumers and have led people to adopt positive purchase behavior for branded items.

The frequency table 8 (Appendix B) depicts data for BrandImage3 which represents the statement The brand you purchase also helps define your individual identity. I found 33

BRAND EQUITY & CONSUMER LOYALTY that the sweeping majority of 46% agreed and another 10% strongly agreed that brands they purchased helped them express their individual personality while 26% of the respondents held a neutral stance. Table 9 (Appendix B) shows data for BrandLoyalty3 which represents the statement You like to buy products of different brands each time you shop. I found that while 23% of the respondents agreed that they like to buy products of different brands each time they shop, a majority of 48% held a neutral stance on this question. However, 26% of the respondents disagreed and 1% of the respondents strongly disagreed with this statement therefore expressing their dissent with varying purchase behavior in terms of the brands. The findings are consistent with the literature review I carried out. Emari (2012) asserted brand loyalty as a mediating factor in creating brand equity. Therefore, the hypothesis H 3 that states Higher the brand loyalty, higher will be the brand equity will be accepted.

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BRAND EQUITY & CONSUMER LOYALTY Graphs and Illustrations The respondents were asked several other questions to gauge their opinions and perceptions about various facets of the topic and their responses were converted into bar charts and pie charts to graphically display their views on brand equity. These questions helped me find out what factors affected brand equity positively and which factors had no or negative impacts on brand equity. The chart in Figure 1 (Appendix C) depicts that 26% of the respondents purchase decision would be affected if a brand was being endorsed by a celebrity they disliked, but 32% of the respondents disagreed with this statement. However, Figure 2 (Appendix C) shows a wide majority of 44% agreed and an additional 33% strongly agreed that advertisements were an extremely effective tool of altering peoples perceptions about branded items. Moreover, advertisements are also used as mediums to convey information not only about the product characteristics but also convey the personality of the brand to the consumers. Essentially, that means that when a consumer analyzes a brand as a possible purchase option, he or she associates traits such as sincerity, passion, energy etc. with different brands and then tend to buy brands that are similar to their own personality. This is illustrated in Figure 3 (Appendix C) where a total of 46% of the respondents agreed, and an additional 10% strongly agreed that the brand they bought helped them express their individual identity. Despite personal associations with brands, maintaining loyalty among the consumers is a difficult task. Figure 4 (Appendix C) shows that while 48% of the respondents remained neutral, 28% of the respondents did agree that they were likely to buy products from

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BRAND EQUITY & CONSUMER LOYALTY different brands each time they shopped. Loyalty towards a brand as well as the brands goodwill can be enhanced by the brands involvement in social causes. Figure 5 (Appendix C) attests to this statement as 37% agreed and 12% strongly agreed that if a brand delves in social responsibility, that would positively affect their purchase decision.

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BRAND EQUITY & CONSUMER LOYALTY Conclusion My research question was What factors effecting brand equity impact upon consumer buying processes? and I chose this as my topic of research because even though we have repetitively studied about brand equity, it remains an elusive term whose measurement has proven to be a challenge many a times. To attain and maintain competitive edge, every firm, regardless of what products or services they offer, needs to create a name, to establish their brands in the minds of the consumer firmly. It is for this purpose that brand equity was scrutinized upon. Furthermore, brand equity itself comprises various aspects of branding that were attempted to be analyzed separately. This was a cross-sectional study, and a quantitative and qualitative research design was employed. Prior literature on this topic was taken into consideration and findings of previous studies have been used to support the results of this study as well. Questionnaires were filled by 100 respondents, all of them students in universities of Lahore (Lahore School of Economics, Lahore University of Management Sciences, and Beaconhouse National University) to gauge the significance of variables Endorsements, Advertisements, Brand Image, Brand Loyalty, and Promotional Activities. The outcomes of the study pointed out that all variables had a positive correlation with brand equity and were important mediators for consumers during the buying process and influenced their tendency to become brand loyal positively.

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Bibliography Keller, K. L. (1993). Conceptualizing, measuring, and managing customer-based brand equity. Journal of Marketing, 57, 1- 22. Onukwugha,A. (2011). Relationship between product branding and purchase decision (Doctoral dissertation). Available from ProQuest dissertation and theses database. (Document ID 3484764) Lee, J.H. (2012). The Reason Why We Purchase a BRAND-NAME Product. In the KNU times. Retrieved n.d, from http://www.knutimes.com/news/article.html?no=1351. Alamgir, M. (2003). Influence of brandname on consumer decision making process. Retrieved from http://ssrn.com/abstract=177816. Brick marketing (n.d). Retrieved from http://www.brickmarketing.com/define-branding.htm Kouider, S., & Dehaene, S. (2007). Levels of Processing during Non-Conscious Perception. crticial review of visual masking, 362(1481), 857-875. Zhu, J. (2009). Three essays on brand equity, University of Iowa. Retrieved from http://ir.uiowa.edu/etd/770. Mains, A. (2011). Can Advertising Be Used To Curb Patterns Of Over Consumption? Prescott College. Available from ProQuest dissertation and theses database. (Document ID 1502907). Erdem, T. (1998). Brand Equity as a Signaling Phenomenon. Journal of Consumer Psychology, 7(2), 131 157. 38

BRAND EQUITY & CONSUMER LOYALTY Kotler, P. (1997). Marketing Management (7th edition). Upper Saddle River, NJ Prentice Hall. Kahn, B. and R. Meyer (1989). Modelling Customer Loyalty: A Customer Based Source of Competitive Advantage, in G. Day, B. Weitz, and R. Wensley (Eds.), Contributions of Marketing to Corporate Strategy, Greenwich, CT: JAI Press. Wernerfelt, B. (1991). Brand Loyalty and Market Equilibrium. Marketing Science, Vol 10, pp 229 245. Retrieved from http://www.jstor.org/stable/183943

Park, C. S. and Srinivasan, V., (1994, May). A Survey-Based Method for Measuring and Understanding Brand Equity and Its Extendibility. Journal of Marketing Research, Vol. 31, No. 2, Special Issue on Brand Management, pp. 271-288. Retrieved from http://www.jstor.org/stable/3152199

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BRAND EQUITY & CONSUMER LOYALTY APPENDICES Appendix A BRAND EQUITY & ITS EFFECT ON COSUMER LOYALTY Demographics questions
1. Gender: Male Female

2. What is your occupation? a) Self-employed b) Homemaker c) Student d) Employee e) Other( specify): __________________

3. What income group do you fall in? a) 20,000 40,000 b) 41,000 60,000 c) 61,000 80,000 d) 81,000 and above

Section 1: Endorsements 4. You are likely to buy products endorsed by your favorite celebrities. 1 strongly disagree 2 disagree 3 neutral 4 agree 5 strongly agree

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BRAND EQUITY & CONSUMER LOYALTY

5. Celebrities can affect your perception about branded items. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

6. A celebrity you dislike is endorsing your favorite product. Would that affect your purchase decision? 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

Section 2: Advertisements 7. Do you think advertisements play a vital role in inducing people to buy what they think they should buy? 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

8. Do you think advertisements have framed the minds of consumers to buy branded items? 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree 41

BRAND EQUITY & CONSUMER LOYALTY

9. Sometime, when you buy a product, it is because you recall its advertisement. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

Section 3: Brand Image 10. Consumers employ a heuristic (decision rule) to buy only familiar, well-established brands. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

11. When buying a product, it is important to you that your friends recognize the brand name. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

12. The brand you purchase also helps define your individual identity. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

Section 4: Brand Loyalty 13. You are likely to make consistent purchases from a preferred brand. 42

BRAND EQUITY & CONSUMER LOYALTY 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

14. If you are loyal to a brand, your product choice will not be affected by factors such as convenience and/or price. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

15. You like to buy products of different brands each time you shop. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

Section 5: Promotional Activity 16. Involvement of a brand in social causes tends to influence your purchase decision positively. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

17. Promotional activities such as sponsored social events of free samples will influence your purchase decision positively. 1 strongly disagree 2 disagree 3 neutral agree 4 5 strongly agree

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BRAND EQUITY & CONSUMER LOYALTY Appendix B Table 6: Frequency for the question Endorsements2: Celebrities can affect your perception about branded items. Valid Frequency Valid S.Disagree Disagree Neutral Agree S.Agree Total 3 26 29 35 7 100 Percent 3.0 26.0 29.0 35.0 7.0 100.0 Percent 3.0 26.0 29.0 35.0 7.0 100.0 Cumulative Percent 3.0 29.0 58.0 93.0 100.0

Table7: Frequency for question Adverts2 Do you think advertisements have framed the minds of consumers to buy branded items?

Valid Frequency Valid S.Disagree Disagree Neutral Agree S.Agree Total 5 5 13 44 33 100 Percent 5.0 5.0 13.0 44.0 33.0 100.0 Percent 5.0 5.0 13.0 44.0 33.0 100.0

Cumulative Percent 5.0 10.0 23.0 67.0 100.0

Table 8: The frequency table below depicts data for BrandImage3 which represents the statement The brand you purchase also helps define your individual identity. 44

BRAND EQUITY & CONSUMER LOYALTY Valid Frequency Valid S.Disagree Disagree Neutral Agree S.Agree Total 5 13 26 46 10 100 Percent 5.0 13.0 26.0 46.0 10.0 100.0 Percent 5.0 13.0 26.0 46.0 10.0 100.0 Cumulative Percent 5.0 18.0 44.0 90.0 100.0

Table 9: The frequency table below depicts data for BrandLoyalty3 which represents the statement You like to buy products of different brands each time you shop. Valid Frequency Valid S.Disagree Disagree Neutral Agree S.Agree Total 1 26 48 23 2 100 Percent 1.0 26.0 48.0 23.0 2.0 100.0 Percent 1.0 26.0 48.0 23.0 2.0 100.0 Cumulative Percent 1.0 27.0 75.0 98.0 100.0

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BRAND EQUITY & CONSUMER LOYALTY

Appendix C Figure 1: A celebrity you dislike is endorsing your favorite product. Would that affect your purchase decision?
Strongly Agree 2% Strongly Disagree 7% Disagree 32%

Agree 26%

Neutral 33%

Figure 2: Do you think advertisements have framed the minds of consumers to buy branded items?
50 45 40 35 30 25 20 15 10 5 0 Strongly Agree Agree Neutral Disagree Strongly Disagree

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BRAND EQUITY & CONSUMER LOYALTY

Figure 3: The brand you purchase also helps define your individual identity.
Strongly Disagree 5% Strongly Agree Disagree 10% 13%

Agree 46 46%

Neutral 26%

Figure 4: You like to buy products of different brands each time you shop.
Strongly Agree 2% Strongly Disagree 1% Disagree 26%

Agree 23%

Neutral 48%

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BRAND EQUITY & CONSUMER LOYALTY

Figure 5: Involvement of a brand in social causes tends to influence your purchase decision positively.
Strongly Disagree 4% Disagree 17%

Strongly Agree 12%

Agree 37%

Neutral 30%

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