Factors influencing brand loyalty in pharmaceutical industry evidence from vietnam

Keywords: Brand awareness, perceived quality, brand loyalty, country of origin, pharmaceutical companies... The relationship between brand awareness, brand image, perceived quality and

International School of Business -

LA THI HONG LOAN

FACTORS INFLUENCING BRAND LOYALTY IN

PHARMACEUTICAL INDUSTRY:

EVIDENCE FROM VIETNAM

MASTER OF BUSINESS (BY HONOUR)

Ho Chi Minh City-Year 2015

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business -

LA THI HONG LOAN

FACTORS INFLUENCING BRAND LOYALTY IN

ACKNOWLEDGEMENTS

I would like to express my sincere gratitude to Dr.Tran Ha Minh Quân who has supported me a lot with the thesis preparation and motivated me throughout the journey of the thesis I strongly believe that I could have not completed this thesis without the assistance from all of my friends who helped me to guide the customers to do the survey and chased for data submission And finally my special thanks to my family who was always with me to show their empathy and encourages me to complete this thesis

December 8, 2014

Ho Chi Minh City, Viet Nam

Abstract

The pharmaceutical industry is more different than others, because product is the more

specific and varies than products in other market Most of the pharma companies pay

attention to research and development in order to launch a new drug which can compete

with the rivals In addition, almost pharma companies are successful due to they have a

powerful sales to marketing their medication to the doctor By this mean, they will spend

time and money to create these factors mentioned above Therefore, Pharmaceutical

branding is an important way to create awareness among potential benefits of drugs and

medicines In the fact that, they neglected to establishing brand and specially building

brand loyalty, because the benefit of customer loyalty bring to pharma companies is very

much, for example it can help pharma companies reduce six times costs to find a new

customers, this research aimed to explore elements influencing brand loyalty and

examining the effect of country of origin on those factors This study is a quantities

research, 349 questionnaires were delivered to respondents who were going to hospital for

treatment Collecting Data are used to assess the scale and test hypotheses Through

Cronbach Alpha coefficients analysis to test reliability of scale, explore factor analysis

(EFA) and confirmatory factor analysis (CFA) were used to test validity of scale and

finally, SEM was used to test hypothesis

The result showed that marketing managers should be pay attention perceived quality,

brand awareness if they would like to establish customer loyalty toward pharmaceutical

brand Besides, the country of origin has no impact to brand loyalty because they don’t a

habit about self-medication, they strongly respect and believed that doctors will treat them

better

Keywords: Brand awareness, perceived quality, brand loyalty, country of origin,

pharmaceutical companies

Tables of content

CHAPTER I INTRODUCTION 1

1.1 Background to the study: 1

1.2 The statement of problem: 2

1.3 The research objective: 3

1.4 The significant of research: 3

1.5 The scope of the study: 4

1.6 Structure of the study: 5

CHAPTER II LITERATURE REVIEW AND THEORICAL MODEL 6

2.1 Definition of brand: 6

2.2 Definition of brand equity: 7

2.3 Customer based perspective of brand equity (CBBE): 8

2.3.1 Brand awareness: 9

2.3.2 Brand image: 9

2.3.3 Perceived quality: 10

2.3.4 Brand loyalty: 11

2.3.5 Country of origin: 12

2.4 The relationship between brand awareness, brand image, perceived quality and brand loyalty. 13

2.5 The relationship between country of origin and customers base brand equity: 14

2.6 The relationship between COO and brand loyalty: 15

2.7 The conceptual research model: 15

CHAPTER III METHODOLOGY 18

3.1 Research process: 18

3.1.1 Methodology research: 18

3.1.2 Procedure of research: 18

3.2 Sample design: 19

3.3 Measurement scales: 20

3.3.1 Brand Awareness: 20

3.3.2 Brand image: 21

3.3.4 Brand Loyalty: 22

3.3.5 Country of origin: 22

3.5 Data analysis method: 23

3.5.1 Reliability Analysis 23

3.5.2 Exploratory Factor Analysis (EFA): 23

3.5.3 Confirm factor Analysis (CFA): 24

CHAPTER IV DATA ANALYSIS 25

4.1 Descriptive data analysis: 25

4.2 Measure scale assessment: 26

4.2.1 Cronbach alpha reliability analysis: 26

4.2.2 Exploratory factor analysis (EFA): 28

4.2.3 Confirm factor analysis (CFA): 30

4.2.4 Test hypothesis with SEM analysis: 30

4.2.5 Discussion: 32

4.2.6 Summary: 33

CHAPTER V: CONCLUSION AND IMPLICATION 35

5.1 Conclusion: 35

5.2 Key findings and contribution of study: 35

5.2.1 Key finding: 35

5.2.2 Contribution of study: 36

5.3 Managerial Implications: 36

5.4 Limitation: 37

References 38

Appendix 1 42

Appendix 2 46

Appendix 3: 50

Lists of table

Table 2.1 List of hypothesis 16

Table 3.1 procedure of research 19

Table 4.2 Reliability analysis results 26

Table 4.3 The Result of EFA: 28

Table 4.4 Show the result CR and AVE after CFA analysis: 30

Table 4.4: Regression weight and standardize regression weight: 31

Table 4.5: Standardized Regression Weights 31

Table 4.5 Summary hypothesis and results: 32

Lists of figure Figure 1 Research model 16

Figure 2 CFA result 53

Figure 3 SEM result 53

CHAPTER I INTRODUCTION

This chapter introduces the background to the study, problem statement of research, the objective research, the scope research purpose of this study and the other contents such as the rationale of the research, structure of the study

1.1 Background to the study:

According to Ministry of Health, pharmaceutical sales in 2013 is approximately 2.775 million USD, domestic medicine occupied 1.300 million USD, with the growth CAGR in 10 years later will be 16% Although international economy industries were impacted by international crisis but pharmaceutical industry still gradually increase with impressive number 18.8% per year from 2009-2013 There are many reasons which lead

to upward trend but it couldn’t be denied is product of pharmaceutical is a special drug, not instead the others, adjacent to being awareness of people about health care is more and more improvement and last reason is the Vietnamese viewpoint about using domestic or imported medicine significantly change

Firstly, the development of education which leads to perceive high about health care

of Vietnamese Therefore, when people have a chance which approaches international drug and pharmaceutical market, their needs will be increase entailing pharmaceutical industry will be develop According to World Bank, take into account to 2012, Health expenditure per capita of Vietnamese is 95 USD , is compared with region is still quite low for example Singapore $2.286 , Malaysia is $346 , this organization hope the numbers will be go up in the future

Secondly, doctors and pharmacists who have a favorite prescribe import medicine because they supposed that the import ones is better than others, statistic data show that only 20-30% doctor prescribe domestic drug per total for patients However, Vietnamese perception about using domestic and imported drugs have been exchanged dramatic, according to Ministry Of Industry And Trade statistic data, it show that consumer ratio who

using domestic is up to 70%, thus, it could be said that pharmaceutical industry is expected substantial growth

1.2 The statement of problem:

The pharmaceutical industry is more different than others, because product is a specific and varies product in other market According to Rafiq and Saxon’s research (2000), a pharmaceutical drug before launching the market, pharmaceutical companies have to spend nearly 12 years for research and development process as well as applying for commercial licenses and certifications Unfortunately, the drug can only have 8 year time in order to sell on the market before patent expires and initiate price competition Therefore, it can be said that the success of the industry relied on three factors: strong research and development (R&D), aggressive defense of patents and use of the dominant promotional tool - powerful sales forces (Veloutsou & Panigyrakis, 2001; Moss & Schuiling, 2004; Moss, 2007) In other hand, the industry has been concentrated on R&D and product factors and not market drive In addition, introducing a new blockbuster drug

to the market is becoming even more expensive as the costs of R&D increase (Veloutsou

& Panigyrakis, 2001; Moss & Schuiling, 2004; Moss, 2007; Rod et al,) Besides, there is

an existence of generic drug has also been developing rapidly and constitutes an increasingly real threat for the industry Generic companies benefit, not only from patent expiration, but also from the cost reduction pressures evident in every healthcare system around the world However, the picture has changed, industry growth has been slowing down and firms have been searching for ways to maintain it To acquire new competitive advantage, Moss and Schuiling (2004) suggest that pharmaceutical companies should start paying more attention to building brands than simply products, therefore transferring from research-oriented, product-centric strategy to brand and consumer centricity Simultaneously, Moss and Schuiling (2004) as well as Griffiths (2007) clearly state that pharmaceutical companies ought not to solely rely on their sales force and R&D anymore – the emphasis needs to be put on marketing and branding, in particular, it is need to establish brand loyalty in pharmaceutical According to Aaker (2007), the benefits of brand

loyalty for the companies could be great For example: Levins (2009) says that companies which with a high rate of loyal consumers reduce the marketing costs of the firm instead

of the cost of appealing a new customer Indeed, according to Sanz (2009), he supposes that the cost of seeking new customers is about six times higher than the cost of retaining an old one

Besides that, since 1960s, there has been an extensive literature on country-of-origin and how that influenced consumer attitudes (Bilkey and Nes, 1982; Khachaturian and Morganosky, 1990; Ahmed and d’Astous, 1993; d’Astous and Ahmed, 1999) and purchasing intentions (Morello, 1984; Han, 1990; Lawrence et al., 1992; Lin and Sternquist, 1994; Ahmed and d’Astous, 1995) towards foreign products and services However, there is a little research about the effect of country of origin on brand loyalty and components of brand equity Therefore, this study attempt to examine the effect of COO

on three items of brand equity and brand loyalty in pharmaceutical industry

1.3 The research objective:

This study attempts:

+ To explore elements influencing brand loyalty in pharmaceutical industry in

Ho Chi Minh City + To investigate the effect of country of origin on brand loyalty in pharmaceutical industry in Ho Chi Minh City

+ To examining the effect of country of origin on brand Awareness, brand Image and perceived quality in pharmaceutical in Ho Chi Minh City

1.4 The significant of research:

The research provides valuable insights to managers of pharmaceutical companies can use factors impacting brand loyalty such as Country of origin to direct advertise consumers and retain consumer brand loyalty Moreover, marketing managers can use strategic relate to brand attributes in order to create and maintain customer’s loyalty and increase profitable and reduce costs which will be useful for companies?

1.5 The scope of the study:

Firstly, this study is only conducted by selecting convenience sample for researcher and the purpose research in order to define factors affecting brand loyalty depend on customers based brand equity ‘s view, therefore, the respondents is consumers who used

to go hospital for treatment Hence, consumers of the district eleventh, Tan Phu district, district fifth hospital in Ho Chi Minh City were choose random for this study

Secondly, this study is only focus on over the counter market in which is also in short OTC, because of a couple of additional concerns:

Adapted from DeLorme et.al (2010), OTC medication can be defined as medication that does not require a prescription from a medical practitioner; it can be purchased freely and it is regulated by health authorities through OTC monographs which contain the approved ingredients, dosage, instructions, formulation and labelling of medication Griffiths (2008) defines that for many companies, focusing on OTC products

is an approach of building sales and developing new business value, which has resulted in some companies to switch from POM to OTC brands

In addition, OTC medication can be used by consumers to treat certain conditions that do not require the approval or regulation by a medical practitioner (DeLorme et al., 2010) By this mean, consumers are looking for easing their pains and other symptoms by using OTC products for self-diagnosed diseases (Ashman et al., 2007), after searching on the Internet a cause for their symptoms In fact, Blackett and Harrison (2001) claim that over 90 percent of consumers in the US are in favor of switching more brands to OTC

Finally, The OTC market also has the ability to help the pharmaceutical companies with patent expires and increased generic competition by offering a new, consumer, and brand-based market

1.6 Structure of the study:

The structure of this research report consists of five chapters Chapter 1 introduces the overview of the research topic Chapter 2 presents the theoretical basis of the concepts involved, theoretical modeling with the proposed hypothesis Chapter 3 presents the research methodology to test the scale and theoretical models offered Chapter 4 presents the results of the implementation of the testing and analysis of information and data from which to draw conclusions for the research hypotheses proposed in Chapter 2 Chapter 5 summarizes the main results of the study, the contribution of management theory and practice and also mentioned the limitations of research to guide subsequent studies

CHAPTER II LITERATURE REVIEW AND

THEORICAL MODEL

This chapter, the researcher focus on defining the construct of brand, components

of brand equity based on Customer based perspective of brand equity (CBBE), for example brand awareness, brand image, perceived quality, brand loyalty, as well as country of origin In addition, some relevant studies will be introduced, research model will be established depend on the relationship of components in the conceptual framework This chapter is arranged as: definition of brand, definition of customer based brand equity, definition of country of origin, the relationship brand loyalty and components of brand equity, including brand awareness, brand image, perceived quality, country of origin and final is conceptual framework presented

2.1 Definition of brand:

Branding has existed for centuries as a way which helps consumers can distinguish the goods of one producer from those of another However, according to Nguyen & Nguyen (2011), there are two viewpoint about brand, named is traditional and synthetic view

Firstly, the leading traditional viewpoint about brand, it could be omitted is the definition of the American Marketing Association (AMA), they defines a brand as a name, term, sign, symbol, design, or a combination, which is aimed to identify the goods and services of a firm in order to differentiate them from competition By this means, brand is understood to be one component of products and main character of brand are used to make different this product from other product However, this view has been change later because some scholars suppose that this perspective is not general the role of brand in the international economic market turning into global economic market (cited Tho et al (2011)) Therefore, the second viewpoint about brand is emerged, which is complement for that definition The synthetic perspective in short it is said that product is a component

of brand Indeed, some scholars represent for this viewpoint as Keller, Davis, Schuiling and Moss,…in particular, Keller (2003), he states that a brand was seemed to be a product

that adds other dimensions that differentiate it from other products and services designed

to satisfy the same need

Besides, Davis (2002) supposes that a brand is not only intangible asset but also critical component of a company and that is a set of promises According to Schuiling and Moss (2004), a brand is a name that will register the product in the consumer's mind as a set of tangible, that is rational, and intangible, that is irrational, benefits A product on its own delivers tangible benefits, whereas a brand offers additional values that arc both the tangible and intangible benefits For example, apple brand is shaped in the consumers’ mind as a brand offering both of benefits, which are tangible and intangible The tangible benefit is quality, fashion and durable of the products and the intangible benefits increases the status and the success of customers when having been used the product of the company

Nevertheless, in the highly competitive market environment, it is very difficult for consumers to distinguish between products of company and rival company So, brand name acts as a resource for companies that allow consumer to identity its preferred product which perceived benefits Brand is not only benefit’s consumers, but also benefit’s manufacturers because they can protect trademark from imitation Thus, brand name refers to a name, symbol, message, form or combination of these to indicate the product or service of a seller or group of sellers to differentiate from competitors (Kotler,1997)

2.2 Definition of brand equity:

The concept of brand equity has begun to receive attention from academics since the 1980s and has been developed until now Brand equity was defined by various scholars such as: Auken (2002) who described that “it is the value of the business and the expectations of consumers has to the organization, products and services, including the experience of communication and awareness of the brand” According to leading authors about brand management (Keller, Aaker, Lassar, Sirvastava, Shocker, Prasad and Dev, etc.), brand equity can be considered as three different perspectives: customers-based

perspective, financial perspective and combined perspective However, the scope and main reason of study is the research want to from consumer perception identify elements influence retain and attract customer loyalty Therefore, this research focus on understanding brand equity is considered as customer based perspective

2.3 Customer based perspective of brand equity (CBBE):

Keller (1991) defined customer based brand equity as “the differential effect of brand knowledge on consumer response to the marketing of the brand” and it happens when the customers get used to the brand and hold some favorable, strong, and unique brand association in memory

There are many classifications and dimensions proposed in the analysis of brand equity Aaker (1991), conceptualized brand equity as a set of assets (or liabilities) suggesting the five categories of brand equity: perceived quality, brand loyalty, brand awareness, brand association, and other proprietary brand assets Keller (2002) separated into two components: awareness and association, Schocker and Weitz (1988) establish brand equity in function of loyalty and image Agarwal and Rao (1996) consider overall quality and choice intention as the main dimensions of brand equity Vazquez et al (2002) indicate the importance of stored associations expressing both functional and symbolic utilities, etc Yoo and Donthu (2001) referred to consumer-based brand equity as cognitive and behavioral brand equity at the individual consumer level which can be described and measured by four dimensions of brand: perceived quality, brand loyalty, brand awareness, and brand association

In this study the researcher uses definition of Aaker whose components have been broadly and accepted by many researchers (Keller, 1993; Low and Lamp, 2000; Prasad and Dev, 2000; Yoo and Donthu, 2001)

According to research mentioned above, brand loyalty is also dimension of brand equity but some other researches show between components of brand equity seem to become a results of interrelationship among these components Taylor, Celuch, & Goodwin

(2004) conducted a study on the importance of brand equity to brand loyalty The study was conducted in a large office equipment industry The result suggested that brand equity, reliability and trust are the first important factors before the behavior and attitude of customer loyalty For this study, research methodology and framework is based on the equity concept of Aaker and Keller through which we analyzed the four dimensions of brand equity & firm performance By this mean, it can be found that there is a relationship between components of brand equity and brand loyalty Besides, in the study of Nguyen and Nguyen (2002), the research is conducted in shampoo market in order to explore antecedents of brand loyalty in emerging market The results show that there is relationship between perceived quality and brand awareness to brand loyalty

2.3.1 Brand awareness:

Brand awareness means the ability of a consumer can recognize and recall a brand

in different situations (Aaker, 1996) Brand awareness consists of brand recall and brand recognition Brand recall means when consumers see a product category, they can recall a brand name exactly, and brand recognition means consumers has ability to identify a brand when there is a brand cue Aaker and Keller (1990) mentioned that a brand with high awareness and good image can promote brand loyalty to consumers, and the higher the brand awareness is, the higher brand trust and purchase intention are to consumers Peng (2006) indicates that brand awareness has the greatest total effects on brand loyalty When businesses develop a new products or a new market, they should promote their brand awareness in order to receive the best result because brand awareness is positively related to brand loyalty (Aaker & Keller, 1990; Peng, 2006; Wu, 2002; Chou, 2005)

2.3.2 Brand image:

According to Keller (1993), he defined brand image as a summation of brand associations in the memory of the consumer which leads him towards brand

perception and brand association including brand attributes, brand benefits and brand attitude Hsieh, Pan, & Setiono (2004) argued, brand image helps consumer in recognizing their needs and satisfaction regarding the brand, it also distinguishes the brand from other rivals motivating customers to buy the brand Kotler (2001) defined image as the attitude, thought and feelings of a person for a particular thing or object Roth, (1995) defined that the essential part of the company’s marketing program is to sustain the brand image and strategy of the brand (Keller, 1993; Aaker, 1991) Aaker (1991) found the Image can create importance and it helps consumers with gathering information, distinguish the brand, creates a reason to purchase, and also creates constructive feelings and provides the basis for brand extension

2.3.3 Perceived quality:

Perceived quality is the consumer’s judgment about a product’s overall excellence

or superiority It is not real quality of the product but the customer’s perception of the overall quality or superiority of the product with respect to its intended purpose, relative to alternatives (Zeithaml, 1988) The best way for a brand to increase perceived quality is to invest in improving its real objective quality moreover the firm has to communicate the quality of its brands through quality signals in its marketing actions Thus, consumers perceive brand quality through their direct experiences with the brand and the information obtained in the environmental factors (Yoo et al 2001)

Consumers often judge the quality of a product or a service on the basis of a variety

of information cues that they associate with the product Some of these cues are intrinsic

to the product or a service, others are extrinsic Either singly or together, such cues provide the basis for perceptions of product and service quality

Cues that are intrinsic concern physical characteristics of the product itself, such as size, color, flavor, or aroma In some cases, consumers use physical characteristics to judge product quality Consumers like to believe that they base their evaluations of a product quality on intrinsic cues, because that enables them to justify their product decisions (either

positive or negative) as being “rational” or “objective” product choices Adapted from Judith and Richard (2002), he indicate that perceived quality and brand loyalty have a highly connection, they will positively influence purchase intention

2.3.4 Brand loyalty:

In general, brand loyalty means the repeat purchase of a product or service based on consumer satisfaction Brand loyalty is a major factor in increasing the market share of a firm because when consumers are loyal to the brand they purchase and promote that specific brand which results in higher market growth and profitability As Schiffman & Kanuk (2004) defined that brand loyalty represents a commitment of the consumer to the brand which makes it as an intangible asset that reflects the company's price of the product

or service Generally brand loyalty has been considered either an attitude or behavior From

an attitudinal perspective, brand loyalty is defined as “the tendency to be loyal to

a focal brand as demonstrated by the intention to buy it as a primary choice (Oliver, 1997) From behavioral perspective, it is defined as the degree to which a buying unit such as a household concentrates its purchases over time on a particular brand within a product category (Schoell & Guiltinan 1990)

One of the factors that are widely believed to have a high influence on customer perception toward a specific product, or brand, is the country of origin (O’Cass and Lim, 2002) There is many research in both the areas of country of origin effects and brand equity, but not many empirical research to date has evaluated how country image may affect brand equity Understanding the relationship between consumers country of origin and consumer-based brand equity is important for some reasons Globalization and increased international business activity have facilitated the availability of brands from one country to consumers in other countries (Hsieh, 2001) Besides companies

in developed countries are increasingly shifting production to other countries to benefit from cheaper labor or reduced transportation costs (Haubl, 1996) Further, firms are introducing their brands in other countries for strategic reasons, such as

leveraging economies of scale A Better understanding of the relationships between and consumer- based brand equity would assist marketing decision- makers seeking to improve marketing productivity (Kleppe et al., 2002) Therefore, the purpose of study can explore the impact of country of origin effect on brand equity and brand loyalty

2.3.5 Country of origin:

Country-of-origin is one of the most important factors that significantly influence the purchasing decision of consumers It is defined as comprising the subjective perceptions of a consumer about the products that provide an important observation that such belief, ideas and impressions before making buying decisions Therefore, the country

of origin “made in label” has been used as an important function in meeting with today’s competitive and global environment in order to increase product sales

Adapted from Lusk et al (2006), he state that consumers can use country of origin

is instead of product information, it mean that consumers can use a country’s reputation to forecast the quality of products Actually, many studies are recognized that consumers have significantly different perceptions about products made in different countries, and that these general perceptions have important effects on consumers’ evaluation of the products manufactured in a particular country

Regardless of the direction of the influence of country of origin, empirical evidence suggests that country of origin perceptions may result from stereotyping, it means that there

is a positive relationship between country image and levels of economic development and home country biases (Bannister and Saunders, 1978; Nagashima, 1970; Schooler, 1965; Yaprak, 1978) There are hints in the literature of possible link between country of origin and brand loyalty For example Kim (1995) suggested that favorable country image could lead to brand popularity and hence to consumer loyalty Paswan et al (2003) have demonstrated that consumers tend to be loyal towards a country just as they are loyal to brands

2.4 The relationship between brand awareness, brand image, perceived

quality and brand loyalty

Kan (2002) further suggest that the higher the brand awareness is, the higher the consumers’ quality evaluation is Besides, Aaker and Keller (1990) mentioned that a brand with high awareness and good image can promote brand loyalty to consumers, and the higher the brand awareness is, the higher brand trust and purchase intention are to consumers Peng (2006) indicates that brand awareness has the greatest total effects on brand loyalty

When businesses develop a new products or a new market, they should promote their brand awareness in order to receive the best result because brand awareness is positively related to brand loyalty (Aaker & Keller, 1990; Peng, 2006; Wu, 2002; Chou, 2005) Therefore, the hypothesis one is expected as the following:

H1: there is a positive relationship between brand awareness and brand loyalty

Most of the research has indicated that product image/brand image has significant impact on loyalty intention i.e Customer repurchases intention According to the Vazquez-Carrasco and Foxall (2006) explained that the social, confident and special brand/ product image has a positive impact on loyalty intention, Reynolds and Beatty (1999) found that if the customer received high social benefit from the salesperson then he will be more loyal with a salesperson So, linking the image of the brand is clearly reflected in the increased value priced over competitors (Debra Grace & Aron O’Cass, 2002) Based on previous research, consumer perception about brand image was predicted by product-related attributes, benefits and attitudes of consumers towards that product or service The second hypothesis is anticipate as:

H2: There is a positive relationship between brand image and brand loyalty

Judith and Richard (2002) further indicate that perceived quality and brand loyalty have a highly connection, they will positively influence purchase intention

According to Baldauf, Cravens, & Binder (2003) perceived quality is evaluated about the product for varied individual consumers that according to their satisfaction The perceived quality is used as a key factor by many firms to create their competitive advantage in their relative industry So, Keller (1993) concluded some features on which perceived quality can be measured which consists of performances, conformance quality, reliability, durability, serviceability and style and design Chi, Yeh and Chiou (2009) a new view and evidence to the study of brand loyalty that customer perceived quality will influence brand trust and brand affect, and further to influence brand attitude and purchase behavior Thus, perceived quality and brand loyalty are positively correlated, and brand loyalty will increase if perceived quality increases The third hypothesis is state as:

H3: There is a positively correlated between perceived quality and brand loyalty

2.5 The relationship between country of origin and customers base brand

equity:

Sanyal and Datta (2011) analyzes the relationship of country of origin image with the components of brand equity It has been found that both brand strength and brand awareness lead to a strong formation of country of origin image Papu et al (2006) examined the impact of the country of origin of a brand and three of the dimensions

of its consumer based equity Each of these three consumer-based equity dimensions of a brand, which composite of brand image, perceived quality and brand loyalty, was expected to vary significantly by the country of origin their empirical results confirmed this He also posit that the relationship between consumers’ macro and micro images

of country and the equity they associate with brands originating from that country Result showed that the relationship between these two set of constructs was found to be positive as well as product category specific Li et al (2009) investigate that the effect of country of origin on brand equity The result of this study proved that country of origin can positively influence brand equity Yasin et al (2007) also examined the effects of country

of origin image on the development of brand equity The result showed that brand’s country

of origin positively and significantly influences dimensions of brand equity Therefore, three following hypothesis are predicted as:

H4: there is a positive relationship between COO and brand awareness

H5: there is a positive relationship between COO and brand Image

H6: there is a positive relationship between COO and perceived quality

2.6 The relationship between COO and brand loyalty:

Rave et al (2006) believed that country of origin affects customer loyalty towards the brands originating from the country There are evidences in the literature of possible link between country of origin and brand loyalty For example Kim (1995) suggested that favorable country image could lead to brand popularity and hence to consumer loyalty Paswan et al (2003) have demonstrated that consumers tend to be loyal towards a country just as they are loyal to brands Thus, the hypothesis is presented as following:

H7: There is a positive relationship between COO and brand loyalty

2.7 The conceptual research model:

The purpose of this research is help marketing manager plan a strategic in order to retain customer loyalty to brand from components of brand equity Hence, the author assume research model in which country of origin, brand awareness, brand image and perceived quality as independent variables, brand loyalty as dependent variable Base on literature review above, it is find that there is a relationship between Brand Image, Brand awareness, and perceived quality on brand loyalty Simultaneously, there is a link between Countries of origin on components of brand equity from customer’s perception and also there is a relationship between country of origin and brand loyalty

Figure 1 Research model

Table 2.1 List of hypothesis

Hypothesis Statement of hypothesis

H1: There is a positive relationship between brand awareness and brand loyalty H2: There is a positive relationship between brand image and brand loyalty H3: There is a positively correlated between perceived quality and brand loyalty H4: There is a positive relationship between COO and brand awareness

H5: There is a positive relationship between COO and brand Image

H6: There is a positive relationship between COO and perceived quality

H7: There is a positive relationship between COO and brand loyalty

This chapter presents some constructs of dependent variables and independent variables, the relationship between COO and brand awareness, image, perceived quality, brand loyalty Besides, the correlation of components in customers based brand equity as brand awareness, image, perceived quality and brand loyalty is also explain detail The

H7

H3

H2 H1

Perceived quality

Brand image Brand awareness

following chapters will present how we develop measurement scales for each constructs in the research model The research methodology, and data analysis procedure before having conclusion for the results of each hypothesis with empirical data

CHAPTER III METHODOLOGY

Chapter II presents construct of brand, customers based brand equity (CBBE), dimensions of CBBE (brand awareness, brand image, perceived quality, brand loyalty), and country of origin The conceptual framework is established from constructs and seven hypotheses are also proposed for this study Chapter III will be identified research process, methods using in research, sampling design, and measure scales and data analysis method

3.1.2 Procedure of research:

The way is used for conducting the investigation is present as the table following:

Table 3.1 procedure of research

Step 1: Pilot study:

Based on literature review and research model, the researcher identifies the scale in order to measure component in the model from previous research However, there are many differences about culture and the level of economic as well as the level of perception of the resident between Viet Nam and foreign research Therefore, pilot study is refined scale for suitable for contextual research in Viet Nam

Through quality study, a questionnaire were developed and investigated for 10 respondents in order to check clarify of the items in questionnaire, the content of questionnaire The feedback from stakeholder is very important for refining scale measure

as well as the people who will attend in the survey could understand clearly The final questionnaire is adjusted based on feedback and is used for main study

Step 2: Main study

This phase is conducted by quantitative research The researcher delivery questionnaires directly to respondents who go to the Hospital for treatment or take their

relative see the doctor Data is used for testing hypothesis and research model

3.2 Sample design:

Because of some objective reasons, the method is used for selecting respondents for this research is convenience sample In order to choosing a large sample and reliable data set, the questionnaires were delivered for respondents who go to hospital in district 11, Tan Phu, 5 because they can understand or use to bought a drug for treatment or bought for their relative, and the next reason is these hospital is large, numbers of patients who other

districts can go these places to cure Hence, in that case their answer will be more reliable and objective

As mentioned above, the main method which is used for analyzing data is Structural equation modeling, signed SEM However, according to RayKov and Widaman (1995), they said that some prestige researchers in this field supposed that this method require a large sample because the principle operation of SEM depends on large sample distribution theory Moreover, how to define large sample, that is an controversial issue, some researchers statement that the size sample depend on estimate method for example ML, GLS, or ADF ( Nguyen & Nguyen, 2011) Hoelter (1993) said that the saturated model size must be have 200 upper This study is selected sample size about 300

In order to achieve expected sample size, the researcher delivery about 370 questionnaires in hospital in district 11, tan phu, and district 5 The process of collecting data happened one week After gathering and checking the data, there are 21 questionnaire

is omitted because there are many missing value and some ones is uncooperative, such as their choose 1 or 2, 3….for all items in questionnaire

Finally, there is only 349 questionnaires is used for next step The data inputting and screening through SPSS version 22 and Amoss version 22 software in order to test model and hypothesis

3.3 Measurement scales:

3.3.1 Brand Awareness:

This brand equity’s component refers to the strength of brand’s presence in the mind

of customer (Aaker, 1996) The scale items for this dimension will be built relied on brand recognition and brand recall, which means the ability of knowing and remembering a certain brand of customers, also they could distinguish and recognize that brand from other alternatives Brand awareness scale items for this study are symbolized by BA with Likert scale ranging from 1 (strongly disagree) to 7 (strongly agree)

Statement code

When talking about pharmaceutical industry, I will remember BA2 Medicine brand I like immediately

I can recognize drug brand I like among other brand BA3

I can distinguish favorite drug brand other brands BA4

I can describe characteristic of drug brand quickly BA5

3.3.2 Brand image:

Brand Image requires the development of scale items specific to a product category (Dobni and Zinkhan, 1990) Based on some previous study of Low and Lamb (2000), Kim

et al (2003), together with the adding of two other variables such as “long history” and

“familiar to me” to supplement the measurement items (Aaker, 1991; Keller, 1993), the measurement items for brand image is built as follows

Drug brand make me feel comfortable BI1 Drug brand has a clear image to me BI2 Drug brand make me feel special BI3 Drug brand are suitable for high class customers BI4 Drug brand are expensive BI5

I feel drug brand to be familiar to me BI6

3.3.3 Perceived quality:

According to measurement scale of Yoo & ctg (2000) and Doddy (1991) (cited in Tho Nguyen et al (2008)

I like the quality of drug brand because is extremely high PQ2 The probability of the drug brand be functional is very high PQ3 The probability of the drug brand be reliable is too high PQ4 Drug brand I bought must have a very good quality PQ5 Drug brand seems to have a poor quality PQ6

3.3.4 Brand Loyalty:

Customer loyalty depend on a component of brand loyalty which determines whether customer is committed to the brand, can make a key contribution to business performance of a company According to Schiffman & Kanuk (2000), there are 2 ways to measure brand loyalty: attitude-based measurement and behavior-based measurement This study will follows attitude-based measurement according to a survey conducted

by Tho et al (2002)

I use drug brand I like beer very often BL1

I have an intention to drug brand I like again BL2

I usually use drug brand as preferred choice BL3

I will recommend drug brand I like to other people,

when they need BL4

I feel close attached drug brand I like BL5

3.3.5 Country of origin:

Items adapted from previous research from prestige researchers These items measure quality as well as reputation of country (e.g Yasinet al., 2007; Kumar and Barker, 1987; cited in Sanyal and Datta, 2011.)

1 I will prefer the brand that originates from a country rich in R&D COO1

2 I will prefer the brand that originates from a country with COO2

a high level of technological advancement

3 I will prefer the brands that originates from a country COO3 which maintains a high level of quality

4 I will prefer the brand that originates from a country COO4 which maintains an image of more new drug development

5 I will prefer the brand that originates from a country COO5 which is prestigious in terms of drug manufacturing