DIFFERENT FACTORS THAT AFFECT THE BRAND EQUITY OF VIETNAMESE COMMERCIAL BANKS45467

The outcome has pointed out five major factors that affect the brand equity including: brand loyalty, brand admiration, brand association, brand awareness and perceived quality.. The obj

DIFFERENT FACTORS THAT AFFECT THE BRAND EQUITY OF

VIETNAMESE COMMERCIAL BANKS

Nguyen Quoc Huy*, Nguyen The Khai, Lu Phi Nga

Lac Hong University

ABSTRACT

This research is conducted to determine different factors that cause impacts

on the brand equity of multiple commercial banks in Vietnam Qualitative research is applied to assess reliability test using Cronbach’s Alpha coefficient, exploratory factor analysis EFA and regression analysis with multiple variables The outcome has pointed out five major factors that affect the brand equity including: brand loyalty, brand admiration, brand association, brand awareness and perceived quality The result of this research could be referred to as a method of examining brand equity as well as applied to help increase the brand equity of commercial banks in Vietnam according to customers’ perspectives

Key words: brand equity, factors affecting brand equity, commercial banks,

Vietnam

1 INTRODUCTION

Banking industry is considered as an extremely important financial institution; even more important than any other industry Reliability plays a vital role in the existence of banks Thus, every bank need to establish a strong, healthy and trustful brand image Customers’ bank selection is not only affected by tangible factors but also factors related to reliability, preference, bias, admiration, etc Those are different aspects that help shape the brand of the bank Subsequently, brand has become the core factor for commercial bank to achieve success A positive brand allows the bank to earn a considerable number of traditional customers, respect from competitive rivalry, trust from managerial department as well as the whole society Besides that, brand is also

a key point when investors consider to or not to invest into a particular bank

* Corresponding author

Email address: huy175@gmail.com

In Vietnam, hundred thousands of commercial banks are operating with the amount

of authorized capital ranging from thousand billions of Vietnam Dong (VND) to dozen thousand billions of VND In comparison to the World’s banking systems, Vietnam

is one of the countries that experience the largest number of banks The number

of smaller banks with the amount of authorized capital being approximately 3.000 billion VND (the required amount of authorized capital according to the Vietnamese National Bank’s regulation) is considerable, which cause disadvantages in terms of competing against competitive rivalry, attracting customers, infiltrating the market as well as creating reliability for customers

However, there is a major number of banks whose founders do not precisely understand about roles and importance of branding; they are also suffered from the lack of branding and brand developing strategy

For that reason, carrying out research based on customers for the purpose of navigating the impacts of the above factors on the brand of all commercial banks in Vietnam nowadays is undeniably essential

2 LITERATURE REVIEW

2.1 “Brand” definition

Brand is technically a tangible property which play a key role in business competition, market development and is also vitally meaningful to the corporation However, there are multiple definitions for this concept, which are not unified For instance:

The American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers

According to David Aaker, a brand is an image whose characteristics include cultural, physical, emotional, intuitive and exclusive, which is usually associated by customers when a product or company is mentioned

A brand is a combination of different elements such as physical, intuitive and emotional factors and appearance of the product and service, including the name

of the product, service, trademark, characteristics of product or service, the name

of the company, symbol, image, slogan, advertisement, promotions, etc., which are gradually built up through times, impress and gain a position in customers’ mindset Thus, the definition of brand has a wider meaning A brand is a steady and stable property, which can be an instruction for customers’ product selection and establish customer relationship Brand brings numerous of benefits to incorporations, consumers and society In terms of consumers, brand is a coefficient of quality measurement, which creates product acknowledgement In terms of incorporation, brand creates customers’ loyalty, stable sales revenue and higher interest rate With all mentioned benefits to consumers and incorporations, brand plays a key role in the economic development of the society Under a harshly competitive condition, enterprises need to create a strong branding process for to survive and gain competitive advantages

2.2 Banking brand

Banking brand is a combination which basically demonstrate service activities of a particular bank according to the government’s regulations and also fit the operational regulations of each division to satisfy customers’ needs while still ensuring safety in doing business This also help customers understand more thoroughly about how their chosen bank differentiate from other banks, based on scientific and technological innovation of that particular period of time

Because of that, banking brand is the reliability of banks on the market, the intangible property which has certain value in business activities of banks

2.3 Definition of brand equity

Brand equity includes all specific values that the brand can bring to stakeholders (shareholders, employees, customers, society, etc.) These equities are counted in products or services in order to make stakeholders more valuable Or, brand equity

is the added value of the product Products without a brand are just a goods Brand creates emotional value for customers while consuming the product

Overall, there are multiple definitions of brand equity This particular research is based on David Aaker’s definition

Branding expert David Aaker defined brand equity back in 1991 as: “A set of assets and liabilities linked to a brand, its name and symbol, which adds to or subtracts from the value provided by a product or service to a firm and/or to that firm's customers.” (Aaker, 1991)

2.4 Factors that affect brand equity

Research on the factors that affect brand equity is conducted from customers’ perspectives According to Aaker in 1991, there are four main factors contributing to brand equity of a enterprise:

Brand awareness

Brand awareness is a chance that a customer can recognize and distinguish different characteristics of a brand among a combination of other brands on the market When customers decide to consume any brand, the very first thing they should know is to recognize that brand Thus, brand awareness is the first factor on which customer based to classify a combination of competitive brands

Brand awareness allows customers to be more familiar with the brand they choose and make them care about it at the purchasing moment Buyers often select the brand they have known before because they feel safer and more comfortable; a brand which is widely known should be more reliable and has higher product quality Normally, people tend to select a brand which is initially known, rather than the one they have never heard of before This factor is especially important in evaluating and decision-making process of customers towards the brand

A high brand awareness is the foundation which create customers’ desire of consuming some products of a brand Only when customers experience the product

that they can feel its quality as well as other linking impressions which make them loyal to that brand

Brand association

One of the aspects that have the most significant contribution in brand equity is brand association, which is the way customers will consume the brand

Brand association is anything that connects customers’ memory to the brand (Aaker, 1991) Customers will instantly recall one or some unique characteristics of a particular brand when it is mentioned That is also feeling, trust and knowledge that consumers have towards the brand Associations can be either positive or negative Normally, these associations are related to equity, characteristics of the product and valuable features of the company or consumers

Brand association creates equity for an enterprise and its customers by: providing information about the brand, differentiating the brand, setting up reasons to buy products, creating positive attitudes and feelings and being the foundation for brand expansion Moreover, having numerous of positive associations can be consider as a defensive solution against competitive rivalry

Perceived quality

Perceived quality may be generally defined as the consumer's overall assessment of the utility of a product based on what is received and what is given; the difference between the utility that the customers have received and what they expected (Zeithaml, 1988)

Perceived quality is an important factor that affects customers’ decision-making process, thus customers tend to compare quality and price of substitutes which are

in the same category (Jin and Yong, 2005)

According to Davis and his partner in 2003, perceived quality is directly related to brand equity, while Aaker (1991) and Zeithaml (1988a) did not consider perceived quality as the real quality of a brand or its products It is supposed to be customers’ evaluation about the preeminence of an actual being or a service

Consumers usually make quality assessment about a product or service based

on multiple data signals which are connected to it Some of these data belong to internal characteristics of the product, while others may belong to external ones According to Zeithaml’ definition (1988b), data related to internal characteristics such as efficiency, functions, reliability, relevance, durability, serving ability and appearance On the other hand, external characteristics include price, brand, brand image, company reputation, producer image, image of retail stores and product origin Perceived quality directly affects customers’ decision and loyalty, especially in cases when customers have too little or no information about products that they are going to purchase (Aaker, 1991; Armstrong and Kotler, 2003)

Brand royalty

Customers’ loyalty for the brand also plays a vital role in the success of the brand Customers’ loyalty demonstrates their tendency in purchasing and consuming

products or services of a particular brand and continue to repeat these behaviors (Chaudhuri, 1999)

Until now, the concept of brand loyalty is still significant to most of enterprises Some researchers stated that brand royalty regularized customers’ product and service purchasing behaviors as well as reduced the chance that customers might substitute the brand with another one As a result, brand equity could be said to increase corresponding to customers’ loyalty towards the brand The most important purpose

of creating brand equity is to ensure the number of loyal customers of the brand (Yoo at al., 2000; Travis, 2000)

Although researchers have not come to an agreement on the methodology of brand royalty measurement, through related research and documents, we can see that brand loyalty measurement usually consists two types of measurement: attitude and behavior Thus, it is often said that brand royalty is a multi-dimensional concept (Thiele and Bennett, 2001)

Customers’ loyalty is the aspect that illustrates the strength of the brand most clearly (Aaker, 1991) The important thing is that it is necessary to distinguish between passive loyalty, which is directly related to purchasing behavior (behavior of loyalty approach) and more positive loyalty, which is related to attitude (attitude of loyalty approach) They both significantly affect the brand (Benoît H, 2003)

Research about brand royalty has pointed out two explanations that which reflect natural intention of behavior (Lacoeuilhe J, 1997), belief in preeminence in terms of function and utility compared to competitive rivalry, establishing emotional connection between individuals and the brand, which shows their cohesion to the brand

According to Punniyamoorthy and Raj in 2007: “Brand royalty can be considered

as a special case in which market is approached through connections; customers strictly stick to the chosen brand”

The brand that achieve higher brand royalty is the brand that earns higher revenue, which means that this brand has higher equity and is more valuable

High brand royalty is a foundation for creating a huge number of royal customers, which help boost the brand’s sales revenue Diverse perceived quality, plentiful brand association, wide brand awareness will accordingly improve brand royalty

2.5 Research hypothesis

In 2007, Kayaman and Arasli conducted a research about brand equity of hotel industry based on customers’ assessment Two researchers carried out this research

by surveying foreign visitors who had stayed in five-star hotels in the North of Cyprus The objective of this research was analyzing the interrelationship of four factors: Perceived quality, Brand royalty, Brand image and Brand awareness as well as their impacts on the Brand equity of the hotel industry The outcome of the analysis pointed out that three factors: Perceived quality, Brand royalty and Brand image had the strongest interaction with Brand equity while Brand awareness had a weaker interaction with Brand equity Although Brand awareness is considered to be the decisional factor to Brand equity, the outcome of this research pointed out that it

was not the most important factor in creating Brand equity in the hotel industry Two researchers had a significantly important finding: there was a positive relationship between two factors, brand royalty and brand image Thus, to maintain brand royalty, enterprises have to establish and maintain a brand image in customers’ feeling towards hotel industry and vice versa

The study “Measuring brand value based on customers: experimental evidence from the sports clothing market in China” (2009) by two authors Tong and Fawley, has built and tested the theoretical model of the relationship among the four elements that make up the brand value, inclusive of: perceived quality, brand awareness, brand associations, brand loyalty with the entire brand value of the sports clothing industry The purpose of this study is to test Aaker's brand value model in China's sport clothing market The study was conducted with a sample of 304 customers in two major cities of China, Beijing and Shanghai The research model results conclude that the two factors Brand Associations and Brand Loyalty positively affect brand value The brand loyalty factor has the strongest impact, playing an important role

in building brand value in the Chinese sport clothing market; A strong association drives customers' behavior and feelings toward a brand While perceived quality and brand awareness do not impact and have no direct relationship with brand value, this means that the product’s high quality or the brand name alone is not a guarantee for

a successful brand for the sport clothing industry However, the test results show that there is a positive correlation between the elements that make up the brand value: the correlation between perceived quality and brand associations with brand loyalty; brand awareness and brand association with brand loyalty Therefore, the perceived quality and brand awareness also indirectly affects brand value by affecting two factors: brand loyalty and association

Atilgan et al (2009) used four factors: perceived quality, brand loyalty, brand association and brand trust to measure the brand value of two global brands: McDonald's and Coca-Cola in 3 countries which are both culturally and economically different: America, Turkey and Russia The author group has introduced a new element which is Brand Trust and excludes Brand Awareness element from the brand value measurement model The study results show that all four factors are suitable for determining brand value for global brands, this conclusion is also consistent with previous research models

Nguyen Dinh Tho and Nguyen Thi Mai Trang (2002) built a model to measure brand value in the Vietnamese consumer market and the effect of consumer attitudes on advertising and promotion programs with components of brand value The brand value of the two authors includes components: brand awareness, brand passion, perceived quality and brand loyalty The model research results show that the passion and perceived quality are related to brand loyalty Perceived quality of consumers is both a cause of brand loyalty formation and a cause of brand passion formation Martensen & Grønholdt's customer-oriented brand value model is complex and difficult to measure And Keller's model, the two components of brand value are brand awareness and brand impression, this model includes many other small components such as attitudes, attributes, benefits, etc… and those small components consist

of other small components that cause difficulties for the measurement Similarly,

Young & Rubicam's model also includes two components that measure brand value: brand vitality and brand size, these two components, consisting four other small components, are therefore also difficult for the measurement The Aaker model has a high level of brand value, easy to understand and implement Therefore, this model has been used, adjusted and applied by many authors, specifically, Yoo & Donthu (2001) used four out of five brand value components in Aaker's model, namely brand loyalty, brand awareness, perceived quality, and brand associations Yoo&Donthu (2001) removed another proprietary asset component because it was incompatible during brand value measurement In addition, a study on “Effects of brand value on consumer reactions” by Isabel Buil and Eva Martinez (2013) also used

a combination ò 04 components of brand value of above mentioned Aaker model Park C Whan Park, Macinnis Deborah J Macinnis, Eisingerich Andreas B Eisingerich, White Allen M Weiss (2016): Brand admiration using in-depth research on consumer psychology, marketing, engagement and communication of consumers to develop

an integrated, strong perspective and innovative approach to brand management Being assisted by research from leading scholars, this study describes how businesses can turn products, services, individuals or brands into something that customers love, trust and respect The result is greater brand loyalty, stronger brand advocacy and higher brand value Brands that are admired increase their sales more effectively over a longer period of time and have more growth opportunities The real power of Brand awareness is that it provides specific guidance on how brand managers can make customers (and employees) admire a brand Admiring brands provide exactly what customers need (enabling benefits), in a way that is pleasing, fun, interesting and emotionally relevant (enticing benefits), and also makes people feel good about themselves (enriching benefits) The provision of these benefits is fundamental to building, strengthening and promoting brand admiration In addition, the authors gave a measure based on the actions and a common sense of brand value and they developed data to diagnose what to do next In short, brand admiration offers

a coherent, connected approach to help the brand stand steadily when confronting time testing A well-designed, well-managed brand becomes part of community awareness, and ultimately, part of the culture

The five research hypothesesare proposed as follows

H1: Brand loyalty has a positive relationship with brand value

H2: Brand admiration has a positive relationship with brand value

H3: Perceived quality has a positive relationship with brand value

H4: Brand association has a positive relationship with brand value

H5: Brand awareness has a positive relationship with brand value

2.6 Research model

Research model is proposed as follows:

Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 + β5X5 + ε

Of which:

Dependent variable Y: Brand value of Vietnamese commercial banks

β0: Constant

X1: Loyalty - LTT

X2: Admiration - SNM

X3: Perceived quality - CLCN

X4: Association - SLT

X5: Awareness - SNB

ε: Error

3 RESEARCH METHODOLOGY

Discover, adjust and supplement observation variables used to measure research concepts This method has been implemented in some Vietnamese commercial banks (with the focus on Vietcombank) through focus group discussion and in-depth interviews The 5-level Likert scale is used to measure the impact of factors

on the brand value of Vietnamese commercial banks

Identify, analyze and evaluate the impact of factors on the brand value of Vietnamese commercial banks from customers Subjects surveyed are customers aged 18 and above and having experience in trading at 32 of 35 Vietnamese commercial banks According to Hair & ctg, 2006 (cited in Nguyen Dinh Tho, 2012), the sample size must be at least 5 times the number of observed variables This study has 23 observed variables so the minimum sample size is 5x23 = 115 The sample was selected by the convenient method with 424 valid responses Respondents directly fill out the questionnaire and return it to the respondent immediately

The collected data was cleaned, invalid votes were discarded, and the data was processed using SPSS 20.0 software After that, the reliability of the scales was assessed through Cronbach’s Alpha coefficient This is followed by the exploration factor analysis (EFA) Finally, using correlation matrix and linear regression analysis

to test the model and hypotheses, thereby determining the impact of factors on the brand value of Vietnamese commercial banks

4 RESEARCH RESULTS AND DISCUSSION

4.1 Verifying the reliability of the scale

The reliability testing results of the measuring scale show that variables with Cronbach's Alpha Coefficients greater than 0.6 and Corrected Item-Total Correlation coefficient greater than 0.3 are considered appropriate for inclusion in the following steps (Nunnally and BernStein, 1994) According to the results in Table 1, there are

2 excluded variables (LTT5, SLT3) out of 23 observed variables The remaining 21 observed variables continue to be included in the exploration factor analysis

The measuring scale of brand value with Cronbach's Alpha coefficient reaches 0.820 (> 0.6), satisfactory, and the Corrected Item-Total Correlation of the total variables of the 3 observed variables is > 0.3 Thus, all three observed variables are retained for inclusion in factor analysis

Table 1 Results of testing scales

Ordinal

Source: The researcher’s collecting data and SPSS

4.2 Exploration factor analysis (EFA):

Table 2 KMO and Bartlett's Test

Bartlett's Test of Sphericity

Source: The researcher’s collecting data and SPSS

The measuring scale of the components factors affecting the enhancement of the brand value of Vietnamese commercial banks has 21 observed variables, after as-sessing the reliability with Cronbach’s Alpha, was included in the EFA exploration factor analysis From the results of the study, no variables were excluded KMO co-efficient (Kaiser-Meyer-Olkin) reaches 0.855 > 0.5, so EFA analysis is appropriate

in this study Bartlett’s test is statistically significant (Sig < 0.05), showing that the observed variables are correlated with each other in the whole

The Eigenvalues coefficient = 1.100 > 1 representing the variability is explained

by each factor, meaning that the withdrawn factors have the best meaning of information summary Total variance explained: Rotation Sums of Squared Loadings (Cumulative%) reaches 66.312% > 50% This shows that 66.312% of the data variability is explained by 5 factors

Factor Loading coefficient of all observed variables are > 0.5 so it is satisfactory, or the measuring scale of convergent value Thus, with the initial 23 observed variables, after testing the reliability of Cronbach's Alpha, there were 21 observed variables left, and through the EFA factor analysis step, there were 21 observed variables and also withdraw 5 key factors

The brand value measuring scale consists of 3 observed variables, after being assessed on reliability by Cronbach’s Alpha, was included in the EFA factor analysis The analytical results for the KMO coefficient reach 0.704 > 0.5, satisfactory, so EFA analysis is appropriate Bartlett test has significance level = 0.000 < 0.5, so this test

is statistically significant and the observed variables are correlated in the whole At the same time, variance explained = 73.71% > 50% at Eigenvalue = 2.211 > 1, so the model is eligible for analysis

Table 3 Total Variance Explained

Extraction Method: Principal Component Analysis.

Source: The researcher’s collecting data and SPSS

4.3 Correlation analysis

Results from the Pearson correlation coefficient matrix show five factors: loyalty (LTT), admiration (SNM), association (SLT), perceived quality (CLCN) and awareness The awareness (SNB) has a linear relationship with Brand Value (GTH) with a significance level of Sig less than 0.05 Thus, the independent variables have strong linear relationship and the positive effect with the dependent variable which is brand value