Measuring customer based brand equity of english training center

luận văn, khóa luận, đề tài, chuyên đề, thạc sĩ, tiến sĩ

Ministry of Education and Training University of Economics HoChiMinh City

-

Nguyễn Thanh Trung

MEASURING CUSTOMER-BASED BRAND EQUITY

OF ENGLISH TRAINING CENTERS:

EVIDENCE IN HOCHIMINH CITY

ECONOMICS MASTER THESIS

HoChiMinh City - 2009

Ministry of Education and Training University of Economics HoChiMinh City

-

Nguyễn Thanh Trung

MEASURING CUSTOMER-BASED BRAND EQUITY

OF ENGLISH TRAINING CENTERS:

EVIDENCE IN HOCHIMINH CITY

Major: Business Administration

Major Code: 60.34.05

ECONOMICS MASTER THESIS

Supervisor: Dr Trần Hà Minh Quân

HoChiMinh City - 2009

I would like to express my heartfelt gratitude and deepest appreciation to my research Supervisor, Dr Tran Ha Minh Quan for his precious guidance, share of experience, ceaseless encouragement and highly valuable suggestions throughout the course of my research

I would like to extend my sincere thanks to Assistant Prof Nguyen Dinh Tho, the chairman of the proposal examination committee and Dr Vo Thi Quy, member of the proposal examination committee, for their valuable comments and constructive suggestions

My special gratitude is extended to all instructors and staff at Faculty of Business Administration and Postgraduate Faculty, University of Econimics HoChiMinh City (UEH) for their support and the valuable knowledge during my study in UEH

I would also like to avail this opportunity to express my appreciation to Professor Nguyen Dong Phong and UEH Board of Directors for creating MBA program in English

Specially, my thanks also go to Lecturer Ms Ly Thi Minh Chau for her comments

of English from early draft of my thesis

Many thanks to Ms Dang Hai Yen, Mr Lam Hong Phong, as well as the other classmates in MBA class, Batch 16 for their valuable and enthusiastic support for this research study

Last but not least, the deepest and most sincere gratitude go to my beloved parents, my wife, my sons, my nieces, my nephews and my closest friends for their boundless support, abundant love and encouragement throughout my period of study I, therefore, dedicate this work as a gift to them all.

Abstract

Strong brand equity is significantly correlated with success for English Training Centers (ETC) In a study 318 respondents gauged the strength of four ETC brands doing business in HoChiMinh City, Vietnam The internal relationship between the individual dimensions of customer-based brand equity (CBBE) and applicability of the suggested CBBE scale on the ETC industry have been examined in this study One unusual finding was that five component perceived quality scale of Parasuraman (1988) is not applicable A perceived quality scale including only two components: tangibles and assurance was suggested and the assurance component dominated on the relationship to brand loyalty One other unusual finding was that although brand equity comprises all four dimensions being tested, awareness showed the smallest and non-significant effect on brand loyalty Dividing the ETCs into high tuition fee group and low tuition fee group, the researcher found that learners differentiated all four dimensions of CBBE between the two groups The most of attributes of dimensions had significant mean diference, while other attributes did not

Keywords: brand equity; brand image; brand loyalty; brand awareness;

perceived quality; assurance; tangibles; English training center

Contents

Acknowledgement 1

Abstract 2

Contents 3

List of Tables 5

List of Figures 6

Chapter 1: Introduction 7

1.1 Introduction 7

1.2 Research background 8

1.3 Research questions 12

1.4 Scope and Limitation 14

1.5 Research method 15

1.6 Implications of research 16

1.7 Structure of the study 17

Chapter 2 Literature Review 19

2.1 Introduction 19

2.2 Branding 20

2.3 Brand equity 22

2.3.1 Aaker’s conceptualization of brand equity 26

2.3.2 Keller’s conceptualization of brand equity 28

2.4 The measurement of Customer-Based Brand Equity 30

2.4.1 Brand awareness 31

2.4.2 Brand image 32

2.4.3 Brand loyalty 33

2.4.4 Perceived quality 33

2.5 Relationships between brand loyalty and other dimensions of CBBE 34

2.6 Summary 36

Chapter 3 Methodology 38

3.1 Introduction 38

3.2 Research design 40

3.3 Generation items 42

3.3.1 Introduction 42

3.3.2 Operationalization of measures 43

3.4 Preliminary study 46

3.5 Main study 50

3.5.1 Sample design 50

3.5.2 Survey method 53

3.5.3 Data analysis techniques 53

3.6 Conclusion 54

Chapter 4 Research results 55

4.1 Introduction 55

4.2 Descriptive statistics of sample 56

4.2.1 Final sample 56

4.2.2 Characteristics of sample 56

4.2.3 Descriptive statistics 58

4.3 The construct measurement scales 61

4.4 The assessment of customer-based ETC brand equity construct 70

4.5 The assessment of the hypotheses 71

4.5.1 Brand equity rating 71

4.5.2 Testing hypotheses 72

Chapter 5 Conclusion and Implication 85

5.1 Introduction 85

5.2 Conclusions from the research questions 87

5.3 Discussion of the research findings 92

5.4 Contributions of the research findings 94

5.4.1 Theoretical contribution 94

5.4.2 Methodological contribution 96

5.5 Implications of the research 97

5.6 Limitations of the research and further research 99

5.7 Conclusion 99

List of References 101

Appendix 1 106

List of Tables

Table 1 1 The structure of the study 18

Table 2 1 Summary of hypotheses 37

Table 3 1 Research questions and research hypotheses 38

Table 3 2 Measures of brand loyalty 43

Table 3 3 Measures of brand image 44

Table 3 4 Measures of brand awareness 44

Table 3 5 Measures of perceived quality 45

Table 3 6 The demographical status of participants 47

Table 3 7 The final questionnaire 48

Table 4 1 Response frequency of each brand 56

Table 4 2 Characteristics of respondents 57

Table 4 3 Descriptive statistics 58

Table 4 4 The result of EFA test with 31 items 65

Table 4 5 The result of EFA with 29 items 66

Table 4 6 The structure matrix of five factors 67

Table 4 7 Results of reliability test and EFA test for construct measurement scales 68

Table 4 8 Final construct measurement scales 69

Table 4 9 Dimensions of Brand Equity Structure 70

Table 4 10 Brand equity rating 71

Table 4 11 Brand equity ranking 72

Table 4 12 The correlations among the dimensions of brand equity 73

Table 4 13 The results of linear regression analysis 74

Table 4 14 The t-test analysis results of four dimensions of brand equity 77

Table 4 15 Mean differences of brand awareness between high- and low-tuition ETCs 79 Table 4 16 Mean differences of tangibles component between high- and low-tuition ETCs 80

Table 4 17 Mean differences of assurance component between high- and low-tuition ETCs 81

Table 4 18 Mean differences of brand image between high- and low-tuition ETCs 82

Table 4 19 Mean differences of brand loyalty between high- and low-tuition ETCs 83

Table 4 20 The summary of the attributes having significant mean differences 83

Table 4 21 The attributes having significant mean differences between two groups 84

Table 5 1 Summary of testing results of hypotheses 4, 5, 6, and 7 90

Table 5 2 The summary of the attributes having significant mean differences 91

Table 5 3 Summary of testing result of hypothesis 8 91

Table 5 4 Summary of hypotheses testing results 92

List of Figures

Figure 1 1 Structure of chapter 1 7

Figure 1 2 The model of the relationship between brand loyalty and the other dimensions 13

Figure 2 1 The structure of chapter 2 19

Figure 2 2 The relationship between product and brand 22

Figure 2 3 Two approaches to brand equity 24

Figure 2 4 How Brand Equity Generates Value (Aaker 1996) 27

Figure 2 5 Dimensions of brand knowledge (Kevin Lane Keller 1993) 29

Figure 2 6 The conceptual model of customer-based brand equity 31

Figure 2 7 The relationship between brand loyalty and other dimensions 36

Figure 3 1 The structure of chapter 3 39

Figure 3 2 Research process 41

Figure 3 3 Brand selection 51

Figure 4 1 The structure of chapter 4 55

Figure 4 2 Sex of respondents 57

Figure 4 3 Age of respondents 58

Figure 4 4 The first stage of the assessment of the construct measurement scales 63

Figure 4 5 The revised model of the relationship between brand loyalty and the other dimensions of brand equity 76

Figure 5 1 Structure of chapter 5 86

Figure 5 2 The results of linear regression analysis between brand loyalty and the other dimensions 88

Figure 5 3 The revised model of relationship between brand loyalty and the other dimensions 89

Chapter 1: Introduction

1.1 Introduction

This chapter provides a general introduction for the current study, by drawing a general picture of the following chapters and the study as a whole, beginning with a general introduction in section 1.1 Section 1.2 examines the research background, in which the gaps in the empirical studies on branding strategies are identified Section 1.3 defines the research questions and lists the research hypotheses

In addition, section 1.4 discusses scope and some limitations of the current study Section 1.5 briefly discusses the general aspects of research methodology such as research types and research design

Section 1.6 provides implications of this study Section 1.7 introduces the structure of the study The structure of chapter 1 is provided in Figure 1.1

Figure 1 1 Structure of chapter 1

1.6 Implications of the study

1.7 Structure of the study

1.2 Research background

Branding and brand equity have been topics of interest to marketing researchers for many years (Krishnan & Hartline 2001) Traditionally, branding has been focused on tangible products, but in recent decades the focus has expanded to also include branding of services Although branding of services has started to develop, this has not kept pace with the growth of the service sector overall The growth of the service sector has led to increased competition where brand has become an important tool for gaining competitive advantages Branding plays a special role in service companies because strong brands increase customers’ trust of the invisible purchase A strong service brand is essentially a promise of future satisfaction (Berry 2000) Some researchers have also argued that branding is more critical for services than for goods (Krishnan & Hartline 2001; Brady et al 2005) A strong brand can help to reduce the risks associated with the purchase and consumption of many services Other advantages of a strong brand are for example that it creates better margins by adding value to the service, builds stable long-term demand and increases market share Consequently, a strong brand offers many advantages in the service industry and when evaluating the strength of the brand, the concept of brand equity is used

Researchers have defined brand equity variously introducing different viewpoints, but there seems to be a basic agreement on the concept of brand equity All these definitions imply that brand equity is the incremental value of a product due to the brand name (Kim et al 2003) Brand equity research in marketing has largely concentrated on customer perception (Kim et al 2008) Keller (1993) defined customer-based brand equity as “the differential effect of brand knowledge on consumer response to the marketing of the brand” Brand equity is a multidimensional concept (Aaker 1996a) Nowadays, it is no longer enough to brand a product just using its name, it is important that all the

dimensions of brand equity are used in a consistent way in the marketing of the product An understanding of the brand equity dimensions/sources offers managers valuable insights into how brands endow value to the customers and the firm (Balaji 2009) Therefore the understanding about the extent of the contribution of each dimension to the brand equity of some industry is vital for brand managers to create sustainable competitive advantages in today’s competitive business environment through marketing strategies

On the other hand, a business is considered successful when that business reaches its goals in terms of revenue, market share, and brand equity The results are usually created through customers’ brand loyalty Loyalty is the core of brand equity (Aaker 1996b) When customers are loyal to a brand for a product category,

it would be expected that they would purchase the same brand of that product category on each purchase occasion Managers have also rediscovered that the best kind of loyalty is brand loyalty, not price loyalty or bargain loyalty, even though

as a first step it is useful to create behavioral barriers to exit (Kapferer 2008) It is well known that it is much more expensive to gain new customers than to keep existing ones, especially when the existing customer base is satisfied and loyal Moreover, loyal customers tend to provide brand exposure to new customers through “mouth to mouth” communication Thus, brand loyalty creates value to the firm by reducing the marketing expenditure, creating strong brand affiliation and influences others through word-of-mouth (Balaji 2009) According to Moisescu (2006), a high degree of loyalty among customers provides the firm with

a series of specific competitive advantages, loyalty having a strong positive effect

in two main directions, reducing marketing cost and increasing the brand’s revenue Still, brand loyalty can’t be analysed without considering its relationship

to other descriptive dimensions of brand equity like awareness, perceived quality,

or associations (Moisescu 2006) Loyalty is of sufficient importance that other measures, such as perceived quality and associations, can often be evaluated based

on their ability to influence it (Aaker 1996b) Thus, it is necessary to empirically examine the linkages between the brand loyalty and the other dimensions of brand equity

Along that line, in fact, brand equity is recently considered one of the top issues in the English training industry Most English Training Center (ETC) chains have recognizable brand identifiers For an ETC brand name and what the brand represents are the most important assets, if managed appropriately, branding augments ETC’s competitive advantage Beyond visible and tangible factors, inside attributes, i.e., the meaning of brand is very important to ETCs’ success because strong brands usually provide primary points of differentiation between various competitors for learners’ making choice of centers Learners, especially new ones, are confused because of the plethora of brands available to them such

as British Council, International Languages Association (ILA), Apollo, Vietnam – United States Society (VUS), A Au, Dong Au, Viet Uc, Viet My, Au Viet My, Duong Minh, Space, London, Alpha, etc Products and services of ETCs do not inherently have differentiation and channels of distribution are not distinctiveness, learners usually only have price and brand equity to differentiate one brand from its competitors In the absence of strong brands, the only remaining ongoing marketing mechanism is price manipulation, usually in the form of discounting (Kim & Kim 2004) Indeed, ETCs’ essential marketing activities are mostly price promotions such as studying again without tuition fee if examination failure, concessions for students, seasonal discount, etc resulting in persistent price wars that have declined profit and destroyed brand loyalty On the contrary, the efforts

of establishing brand equity might be the key to building brand value and making profit not only for ETCs but also for learners Therefore, an ETC that is managing brand equity more successfully is likely to maintain its competitive advantage Strong brands enable customers to better visualize and understand intangible products (Berry 2000) In other words, branding would increase ETCs’ attraction

to learners For a brand to be strong, the set of perceptions which serve to differentiate the product from competition has to be created in a way so that the learners think of the brand in positive terms ETCs are now interested in building strong brand, but achieving that goal is not always easy

Moisescu (2006) suggests that a successful brand strategy must be based on creating brand loyalty When learners are loyal to ETC, it would be expected that they will attend next class of higher level after finishing present class They would also recommend the ETC at which they are studying to others time after time, if possible For achieving this goal, loyalty’s relationship to other descriptive dimensions of brand equity must be clearly set out, while target consumers must

be classified on a loyalty basis (Moisescu 2006) In addition, the estimation of the contribution of each dimension to brand equity allows ETCs to identify their brand’s positioning relative to competitors, to strengthen brand value, and to build

up corrective marketing strategies if necessary Consequently, effective marketing programs on branding cultivate customers’ confidence, which induces customers’ loyalty and their willingness to pay a premium price for the brand (Kim & Kim 2004)

In summary, the particular interest is given to ETCs now because the quantity of ETCs has been strongly increasing, resulting in even fiercer competition among existing brands of this segment ETCs’ brand managers should know customers’ perceptions to the brand and cultivate customers’ thinking of the brand in positive terms through suitable marketing activities of branding However, not many studies have investigated the relationships among the brand equity dimensions and their impact on brand equity (Balaji 2009) Thus, by adopting the customer-based brand equity approach this study is designed to investigate the differences between high tuition fee ETCs and low tuition fee ETCs with respect to brand loyalty, brand awareness, perceived quality, and brand

image as well as the relationship between brand loyalty and the other dimensions

of brand equity

1.3 Research questions

As above discussed, the current research intends to address three main issues:

Q1 Is there a relationship between brand loyalty and the other dimensions

of CBBE in the system of English training industry?

Q2 Is there any difference of the brand loyalty, brand awareness, perceived quality, and brand image of CBBE between high tuition fee ETCs and low tuition fee ETCs?

Q3 Is there any difference of individual attributes of brand loyalty, brand awareness, perceived quality, and brand image between high tuition fee ETCs and low tuition fee ETCs?

Due to the problem of a lack of empirical studies on brand equity in the education and training industry, based on the review of CBBE theory, it is argued here that the application of Aaker’s model of customer-based brand equity is the suitable solution In the present study, the four key components of CBBE are indicated as: brand awareness, perceived quality, brand image and brand loyalty The first research question addresses the issue of whether there is the effect of brand awareness, perceived quality and brand image on brand loyalty that can be used as the foundation and guidance for enhancing target customers’ satisfaction and making customers’ responsiveness to ETC’s marketing activities positive, in turn inducing customers’ loyalty

These three dimensions of brand equity are proposed as being positively related to brand loyalty in the English training industry Three hypotheses have

been developed to investigate the relationship among these four components as shown in hypotheses H1, H2 and H3

H1: Brand awareness is positively related to brand loyalty

H2: Perceived quality is positively related to brand loyalty

H3: Brand image is positively related to brand loyalty

These three hypotheses are conceptualized into the model as described in Figure 1.2

Figure 1 2 The model of the relationship between brand loyalty and the other

Four hypotheses have been developed as follows:

+H2

+H3

+H1

Brand Loyalty

Perceived Quality

Brand Awareness

Brand Image

H4: There is the difference of brand awareness of CBBE between high tuition fee ETCs and low tuition fee ETCs

H5: There is the difference of perceived quality of CBBE between high tuition fee ETCs and low tuition fee ETCs

H6: There is the difference of brand image of CBBE between high tuition fee ETCs and low tuition fee ETCs

H7: There is the difference of brand loyalty of CBBE between high tuition fee ETCs and low tuition fee ETCs

The third research question addresses the issue of whether there is the difference of the attributes of brand awareness, perceived quality, brand image and brand loyalty respectively between high tuition fee ETCs and low tuition fee ones that helps managers plan appropriate marketing tactics to create brand equity Hypothesis 8 was proposed as follows:

H8: There is the difference of the attributes of the dimensions of CBBE between high tuition fee ETCs and low tuition fee ETCs

1.4 Scope and Limitation

This study is conducted with only four brands of ETC chains in HoChiMinh city A further research with many more brands and larger scope of whole country is really necessary to precisely assess the scale and measure brand equity in education and training industry On the other hand, researches spreading

on other kinds of education and training industry allow managers to have insights into the environment that they operate in the terms of marketing Moreover, confirmatory factor analysis should be employed to address the issues of dimensionality, convergent and discriminant validity

Choosing a type of research depends upon the research questions that the researcher wants to answer This research study is designed to measure ETCs’ brand equity, evaluate the differences between high tuition fee ETCs and low tuition fee ETCs in the contribution of individual attributes to the brand equity Thus, “descriptive” is viewed as an appropriate research type Also, this research

is designed to identify the cause-and-effect relationships between the other dimensions of brand equity and brand loyalty Thus causal research is also implemented in combination with descriptive research In summary, a combination of descriptive and causal research is chosen for this research

Selecting research design is the next step after choosing type of research There are four types of research design from which to select: survey, experiments, observation and secondary data (Zikmund 1997) Selection of research design is based on the advantages and disadvantages of each kind of research designs and circumstances in which the research problem is defined In this research, survey method is used The reason for choosing the survey method is that surveys provide

a quick, efficient and accurate means of assessing information on a population, especially in the case of a lack of secondary data (Zikmund 1997) In this case,

quantitative methods are applied to examine the research questions, using a survey questionnaire as the tool to measure brand equity and its attributes Convenience sampling is used in this research and data is collected using face-to-face interview, conducted by trained interviewers

Most foreign languages centers in Vietnam, especially in English language, are established in a chain and primarily located in HoChiMinh city and HaNoi capital In addition, the English language is chosen for investigation, as this is one

of the most popular foreign languages distributed throughout foreign language training sector In summary, this study focuses on chains of English Training Centers in HoChiMinh city Finally, the data is analyzed using the SPSS Version

16 software program

1.6 Implications of research

The study brings various practical meanings for the managers in education and training industry, educators as well as researchers in marketing concretely as follows:

Firstly, the results of this research aid ETCs to deeply understand the concept of customer-based brand equity and its dimensions in the context of service in general and training foreign languages in particular, resulting in managers’ profound knowledge in designing of marketing programs for building and broadcasting their brands effectively

Secondly, the research suggests the construct scales to measure based brand equity in English training industry to aid checking the brand health

customer-Thirdly, the findings allow the executives of ETCs to identify important dimensions of brand equity to set up the suitable activities for improving perceived quality, brand awareness and brand image, resulting in creating and maintaining loyalty of learners

Fourthly, by dividing the ETCs into high-tuition fee and low-tuition fee groups, the study identifies dimensions and their attributes that learners differentiate between the two groups in order to help ETC brand managers build respective marketing programs

Fifthly, the results of this research contribute complementarily to the literature on brand equity on the world The research is able to be a reference for researchers, lecturers, and students in marketing and management, in Vietnam and

on the world of brand equity as well as the role of loyalty in Vietnam market

Finally, the present study could be a reference of research methodology not only in marketing and management in particular but also the other social sciences

1.7 Structure of the study

This research is structured into 5 chapters Chapter 1: Introduction introduces the research including research background, research questions, hypotheses, a brief research methodology overview, implications and limitations

of research Chapter 2: Literature Review provides a literature review of customer-based brand equity Chapter 3: Methodology discusses methodology utilized in the research, details the research methodology design, research procedures and justification of the data analysis Chapter 3 also supplies details of questionnaire and the development of the survey Chapter 4: Research Results describes sampling and processing data, presents analyzing the data collected and the findings of the research Chapter 5: Conclusion and Implication points out conclusion and implication from the findings of this research project, based on the research questions and hypotheses This chapter also discusses the implications, contributions and limitations of the research in the world of business administration In addition, the recommendations for further research are provided

Table 1 1 The structure of the study

Chapter 2 Literature Review

Chapter 4 Research Results

Chapter 5 Conclusion and Implication

Chapter 2 Literature Review

2.1 Introduction

This chapter provides a literature review for the current study, by mentioning the history of the development of brand as well as previous researches relative to branding and brand equity in aspect of customers, beginning with a general introduction in section 2.1 Section 2.2 examines the branding, in which the relationship between brand and product is identified Section 2.3 conceptualizes the construct as customer-based brand equity Section 2.4 provides previous researches on scales of brand equity, especially the scale of perceived quality Then, section 2.5, by the discussion on relationships among dimensions of customer-based brand equity from the individual customer perspective indicates the key relationships that support to create brand equity Finally, section 2.6 provides a summary The structure of chapter 2 is provided in Figure 2.1

Figure 2 1 The structure of chapter 2

2.2 Branding

Nowadays brand plays a necessarily important role so that it is too difficult

to find out any product without brand Building a strong brand has been shown to provide numerous financial rewards to firms, and has become a top priority for many organizations (Keller 2001) Producers have recognized the importance of brand and are pleasured to pay a large amount of money to build their brands into famous ones Brand has experienced changes in terms of meaning

Branding has been around for centuries as a means to distinguish the goods

of one producer from those of another Originally, brand is considered a component of the product to which it is added According to the American Marketing Association, a brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors (Keller 1998)

Kotler et al (2007) elaborated that brands facilitate the identification of products, services and businesses as well as differentiate them from the competition They protect both the customer and the product from imitation of product

The meaning of brand does not stay at the sphere while market conditions have changed The 1980s marked a turning point in the meaning of brands Management came to realize that the principal asset of a company was in fact its brand names (Kapferer 2008) The additional cash flows emerge as the result of customers’ willingness to buy one brand more than its competitors’, even when another brand is cheaper because of the beliefs and bonds that are created over time in their minds through the marketing of the brand Brand building can therefore be regarded as part of a company’s capital investment and, as a consequence, it has been argued that brands should be treated as intangible fixed asset for financial accounting purposes (Hankinson et al 1993) Brands have

financial value because they have created assets in the minds and hearts of

customers, distributors, prescribes opinion leaders (Kapferer 2008) They are an effective and compelling means to communicate the benefits and value a product

or service can provide They are a guarantee of quality, origin, and performance, thereby increasing the perceived value to the customer and reducing the risk and complexity involved in the buying decisions On the other hand, according to

Kapferer (2008), in our materialistic societies, people want to give meaning to their consumption Only brands that add value to the product and tell a story about its buyers, or situate their consumption in a ladder of immaterial values, can provide this meaning Therefore, a brand is a perceptual entity that is rooted in reality but reflects the perceptions and perhaps even the idiosyncrasies of consumers (Keller 1998) A brand is a product or service made distinctive by its positioning relative to the competition and by its personality (Hankinson et al

1993) Thus, the term “brand” has multiple meanings and is not only an actual product, but also the unique property of a specific owner (Kim et al 2003) According to Kim et al (2003), brand has been developed over time so as to embrace a set of tangible and intangible attributes that appropriately differentiate products Arun Sinha, Chief Marketing Officer of Pitney Bowes, said that a brand

is more than a product – it’s shorthand that summarizes a person’s feelings forward to a business or a product (Kotler et al 2007) Similarly, Ojasalo (2008)

asserted that brand is the promise for the customer and a bundle of attributes that someone buys that provides satisfaction These attributes may be real or illusory, rational or emotional, tangible or invisible It means that the product is only one attribute of the brand that customers decide to buy a product based on their recognition of the brand rather than reality of the product Brand has grown up and covered the product to which it had been added before In other words, the relationship between product and brand has changed and is described in Figure 2.2 below

Figure 2 2 The relationship between product and brand

In summary, brands today play a number of important roles that improve consumers' lives and enhance the financial value of firms (Kotler et al 2006) As economies become global and information more critical, intangible assets have replaced tangibles as a major source of shareholder value Of these intangibles, brands are often the most valuable assets, accounting for approximately one third

of the value of today's Fortune 500 companies (Millward Brown Optimor 2007) According to Kapferer (2008), brands are one of very few strategic assets available to a company that can provide a long-lasting competitive advantage

2.3 Brand equity

Although branding has a long history and brand management practices have existed for decades, brand equity as a central business concept for many organizations has only really emerged in the past 20 years (Leone et al 2006) In 1980s, during the boom of the mergers and acquisitions, the purchase price which was paid for many firms was higher than book value By paying very high prices for companies with brands, buyers are actually purchasing positions in the minds

of potential consumers (Kapferer 2008) It clearly proves that the price includes value of their brands The clear implication of these transactions was that brands were one of the most important intangible assets of a firm (Leone et al 2006) Heineken is a case in point The value of Heineken company is not solely in knowing how to brew beer; it is that people all over the world want to drink Heineken Brand equity is important due to the quality-laden informational content

Brand Product

that it provides when customers process information about a particular product (Krishnan 2001)

There has been a large amount of published research focused on conceptualizing the construct of brand equity According to Keller (1993), there have been two general motivations for studying brand equity One is a financially based motivation to estimate the value of a brand more precisely for accounting purposes or for merger or acquisition purposes Several different methods of brand valuation have been suggested for this approach For example, a subjective multiplier of brand profits based on the brand’s performance along seven dimensions: leadership, stability, market stability, internationality, trend, support, and protection has been used by Interbrand Group In Simon and Sullivan’s study,

by decomposing the value of intangible assets, which is one of the components of the market value of the firm along with tangible assets, brand equity was estimated based on the financial market value of the firm (Kim et al 2008)

A second reason for studying brand equity originates from a strategy-based motivation to improve marketing productivity All the marketing dollars spent each year on products and services should be thought of as investments in consumer brand knowledge (Kotler et al 2006) Given strict competition, it is a critical constraint to increase the efficiency of marketing expenses In other words, marketers have to improve their marketing activities As a consequence, marketers need a more thorough understanding of consumer behavior as a basis for making better strategic decisions about target market definition and product positioning, as well as better tactical decisions about specific marketing mix actions (Keller 1993) Understanding customer brand knowledge – all the different things that become linked to the brand in the minds of customers – is thus of paramount importance because it is the foundation of brand equity (Kotler

et al 2006) The relationship between the consumer and the brand, or more precisely the customer’s perception of that brand, is the key to the brand’s

acceptance (Hankinson 1993) Perhaps a firm’s most valuable asset for improving marketing productivity is the knowledge that has been created about the brand in consumers’ minds from the firm’s investment in previous marketing programs (Keller 1993).

Figure 2 3 Two approaches to brand equity

Hence with different motivations brand equity has been examined from two different approaches: financial-based approach and customer-based approach, respectively (Figure 2.3) The financial approach focuses on financial values such

as potential earning, market value, and replaces cost, whereas the customer brand equity emphasizes customers’ mindset such as awareness, perceived quality, attitudes, preferences, attachments, and loyalty (Kim et al 2008) According to

Kim et al (2008), although a financial approach may provide a more precise insight into the valuation of brand, it may not be useful for brand managers to establish marketing strategies because financial approach is only limited to a brand’s value estimation The customer-based brand equity approach is more practical in a sense that the information offers a strategic vision of customer behavior and managers can develop brand strategies accordingly The present study will not deal with the financial perspective, and the expressions customer-based brand equity and brand equity will therefore be used interchangeable

In the customer-based approach, brand equity pertaining to goods has been well researched in the marketing literature (Kim & Kim 2004) According to

Kotler et al (2006), brand equity is the added value endowed to products and

Brand equity Customer-based approach

Financial-based approach

services He says that this value may be reflected in how consumers think, feel, and act with respect to the brand, as well as the prices, market share, and profitability that the brand commands for the firm Not only Kotler et al., but also many other researchers discuss about the field of branding and customer-based brand equity They suggest many different definitions for a number of different purposes and also share in general meaning that the power of a brand lies in the minds of consumers and what they have experienced, learned, and felt about the brand over time They all acknowledge that there exist many different ways that value can be created for a brand; that brand equity provided a common denominator for interpreting marketing strategies and assessing the value of a brand; and that there exist many different ways that the value of a brand can be manifested or exploited to benefit the firm (Keller 1998)

According to the Ph.D thesis of Quan (2006) at the Southern Cross University, Australia, brand equity can be viewed from two main approaches: economics and customer psychology From the economic perspective, the role of credibility is viewed as a source of equity from an individual consumer Based on the assumption of the imperfect and asymmetrical information structure of markets, brands are used to inform customers about a product’s position and to signal that the product’s claims are credible In addition to the economic perspective, the second perspective based on theories of consumer psychology frequently adopts associative network memory models to develop theories and hypotheses Brand is seen as a node in memory, linked with different associations

of varying strengths, leading to the strength of attitude towards the brand In other words, brand equity is a function of associations that have been built and nurtured

in the customer’s mind This customer psychology approach has dominated the branding literature Even though a consensus definition and measurement has not yet been reached, some models have been widely accepted among academics and practitioners, such as the brand equity theories of Aaker (1991) and Keller (1993)

Therefore, following here we introduce Aaker’s and Keller’s definition of brand equity that is the literature base of this study

2.3.1 Aaker’s conceptualization of brand equity

According to Aaker (1996), brand equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers The major asset categories are (a) brand name awareness, (b) brand loyalty, (c) perceived quality, (d) brand associations As the definition indicates, first, brand equity is a set of assets; second, each brand equity asset creates value in a variety of very different ways; third, brand equity creates value for the customer via enhanced information processing, purchase decision confidence, and increased use satisfaction as well as the firm via effectiveness of marketing programs, brand loyalty, price premiums, favorable environment for brand extensions, etc.; finally, for assets or liabilities to underline brand equity, they must be linked to the name and symbol of the brand, if the brand’s name or symbols should change, some or all of the assets or liabilities could be affected and even lost, although some might

be shifted to the new name and symbol The following figure will clearly illustrate the Aaker’s definition and how brand equity generates value Note that a fifth category of assets, other proprietary assets (e.g., patents, trademarks, and channel relationships) is included for completeness in the Figure 2.4

Other researchers identify similar dimensions (Yoo et al 2000) Yoo and Donthu argued that customer-based brand equity represents a measurement of

“cognitive and behavioral brand equity” through a customer survey The fifth component of Aaker’s definition is not relevant to consumer perception; therefore only the first four dimensions should be regarded as customer-based brand equity (Kim et al 2008) In empirical studies, Aaker’s conceptual definition has usually been used to examine and operationally measure brand equity (Cobb-

Walgren et al 1995; Kim & Kim 2004; Washburn & Plank 2002; Yoo et al 2000)

Figure 2 4 How Brand Equity Generates Value (Aaker 1996)

Brand

Equity

Brand Loyalty

Brand Awareness

Perceived Quality

Brand Associations

Other Priority Brand Assets Competitive Advantage

Help process/ Retrieve Information

Reason-to-buy Create positive attitude/feelings Extensions

Anchor to which other associations can be attached Familiarity-Liking

Signal of substance/commitment Brand to be considered

Reason-to-buy Differentiate/ Position Price

Channel member interest Extensions

Provide value to customer by enhancing customer’s:

- interpretation/ processing of information

- confidence in the purchase decision

- use satisfaction

Provide value to firm by enhancing:

- efficiency and effectiveness of marketing programs

Reduced marketing costs Trade leverage

Attracting new customers Time to respond to competitive threats

2.3.2 Keller’s conceptualization of brand equity

Similarly, Keller (1993) defined customer-based brand equity as the differential effect of brand knowledge on customer response to the marketing of the brand According to this view, the premise of the customer-based brand equity

is that the power of a brand is in what resides in the minds of customers (Kim & Kim 2004) Keller asserted the importance of understanding brand equity from the customer’s perspective, noting that though the eventual goal of any marketing program is to increase sales, it is first necessary for consumers to respond favorably to marketing activities for the brand (Kim et al 2008) According to Keller (1993), understanding brand knowledge is important to be able to affect both the customer’s perception of a brand and the response to a certain marketing activity For his part, he suggests brand knowledge framework with two dimensions described in Figure 2.5 that the first dimension of brand knowledge, brand awareness, is linked to the customer’s ability to identify the brand under different circumstances The second dimension of brand knowledge is brand image, which is defined as perceptions about a brand

as reflected by the brand associations held in consumer memory These associations contain brand meaning to the customers, and it is the strength, uniqueness and favorability of these that play an important role in the customer’s response to different marketing activities The brand image consists of three categories of associations: attributes, benefits and attitudes

Attributes are those descriptive features that characterize a product or service, such as what a consumer thinks the product or service is or has and what

is involved with its purchase or consumption Attributes can be categorized in a variety of ways, for example according to how directly they relate to product or service performance: product –related attributes and non-product-related attributes

The second main type of associations is benefits Benefits are the personal value and meaning that consumers attach to the product or service attributes – what consumers think the product and service can do for them and what it represents more broadly Benefits can be further distinguished into three categories according to the underlying motivations to which they relate: functional benefits, symbolic benefits, and experiential benefits

Figure 2 5 Dimensions of brand knowledge (Kevin Lane Keller 1993)

The last type is the most abstract and highest-level type of brand associations Brand attitudes are defined in terms of consumers’ overall evaluations of a brand Brand attitudes are important because they often form the

basis for actions and behavior that consumers take with the brand (e.g., brand choice) Consumers’ brand attitudes generally depend on specific considerations concerning the attributes and benefits of the brand

In general, most marketing observers agree that customer-based brand equity is a multidimensional construct including some common components such

as brand image, brand awareness, perceived quality, and brand loyalty and is defined in terms of marketing effects uniquely attributable to the brand Customer-based brand equity occurs when the customer is familiar with the brand and holds some favorable, strong and unique brand associations in memory (Keller 1993) A brand is said to have positive customer-based brand equity when customers react more favorably to a product and the way it is marketed when the brand is identified as compared to when it is not On the other hand, a brand is said to have negative customer-based brand equity if consumers react less favorably to marketing activity for the brand, as compared to an unnamed or fictitiously named version of the product (Keller 1998) This customer-based perspective suggests both specific guidelines for marketing strategies and tactics and areas where research can be useful in assisting managerial decision making (Keller 1993)

2.4 The measurement of Customer-Based Brand Equity

Most studies on brand equity focus on customer mindset Particularly, the four dimensions of brand equity including brand loyalty, perceived quality, brand awareness, and brand association, which originate from Aaker’s work, are the mainstream of customer-based brand equity (Kim et al 2008) Indeed, a study by

Kim & Kim (2004) measured customer-based restaurant brand equity and investigated the relationship between brand equity and firm’s performance In another research, Kayaman & Arasli (2007) explored interrelations of the four brand equity components: brand awareness, brand loyalty, perceived quality and brand image in hotel industry and improve the conceptualization of customer-

based hotel brand equity Then Kim et al (2008) examined the relationship between hotel brand equity and guests’ perceived value and revisit intention The researchers measured the following four components of brand equity: brand loyalty, perceived quality, brand awareness, and brand image (Kim et al 2008) In this framework, brand image refers to the set of associations linked to the brand that customers retain in their memories (Kim & Kim 2004)

Adopting two conceptualizations of Aaker (1996) and Keller (1993, 1998)

as well as some other previous research findings (Yoo & Donthu 2001, 2002) conceptual model comprising brand loyalty, brand awareness, perceived quality, and brand image dimensions is used in the present research as described in Figure 2.6 For the purpose of our study, these four dimensions of brand equity are interpreted in following meanings

Figure 2 6 The conceptual model of customer-based brand equity

2.4.1 Brand awareness

Brand awareness is related to the strength of the brand node or trace in memory, as reflected by consumers’ ability to identify the brand under different conditions (Keller 1993) Awareness refers to the strength of a brand’s presence in

Brand Equity Brand Image

Brand Awareness

Perceived Quality

Brand Loyalty

the consumer’s mind (Aaker 1996) Brand awareness consists of brand recognition and brand recall performance

A “brand recognition” occurs when the brand and its qualities are generally known by the customers or consumers (Ojasalo et al 2008) Brand recognition relates to consumers’ ability to confirm prior exposure to the brand when given the brand as a cue In other words, brand recognition requires that consumers correctly discriminate the brand as having been seen or heard previously (Keller 1993) Recognition reflects familiarity gained from past exposure The familiarity factor can be especially important to the brand that has a familiarity handicap with respect to more visible and established competitors In such a case, awareness-building may be necessary to reduce this liability (Aaker 1996)

A brand is said to have recall if it comes to consumers’ minds when its product class is mentioned (Aaker 1996) Brand recall relates to consumers’ ability

to retrieve the brand when given the product category, the needs fulfilled by the category, or some other type of probe as a cue In other words, brand recall requires that consumers correctly generate the brand from memory The relative importance of brand recall and recognition depends on where the consumer makes the decision of buying the product (Keller 1993)

In sum, according to Aaker (1996a), awareness is measured according to the different ways in which consumers remember a brand, ranging from recognition (Have you been exposed to this brand before?) to recall (What brands

of this product class can you recall?) to “top of mind” (the first brand recalled) to dominant (the only brand recalled)

2.4.2 Brand image

In his opinion, Keller (1993) considered brand image as customer perceptions of a brand as reflected by the brand associations that are the other informational nodes linked to the brand node in consumer memory and contain the meaning of the brand for consumers The favorability, strength, and uniqueness of

brand associations are the dimensions distinguishing brand knowledge that play an important role in determining the differential response that makes up brand equity, especially in high involvement decision settings (Keller 1993) Consequently, brand image consists of three dimensions of brand associations The reason for including brand image as a dimension of customer-based brand equity arises from its important role in determining the differential response that makes up brand equity (Kim & Kim 2004)

2.4.3 Brand loyalty

Brand loyalty is closely related to brand equity but is a distinct concept (Keller 1998) Brand loyalty is a core dimension of brand equity (Aaker 1996) that Aaker described as the attachment that a customer has to brand (Kim et al 2008) The attachment here implies the resistance to change and the ability of a brand to survive in fluctuating environments Brand loyalty is often measured in a behavioral sense through the number of repeat purchases (Keller 1998) In that line, Keller (1998) argued that repeat buying is a necessary but not sufficient condition for being a brand loyal buyer in an attitudinal sense Thus, brand loyalty can be categorized as two types: attitudinal and behavioral loyalty (Kim et al 2008) Gounaris & Stathakopoulos (2004) suggested that behavioral loyalty refers

to repeated purchases, and attitudinal loyalty refers to a strong internal disposition toward a brand According to Gounaris & Stathakopoulos (2004), an increase in attitudinal brand loyalty should lead to an increase in behavioral brand loyalty

2.4.4 Perceived quality

According to Zeithaml (1988), perceived quality could be divided into product quality and service quality Product quality is comprised of seven dimensions (performance, features, conformance with specifications, reliability, durability, serviceability, and fit and finish), whereas service quality dimensions include tangibles, reliability, competence, responsiveness, and empathy After Parasuraman, Zeithaml, and Berry developed a method to measure service quality

(SERVQUAL), a large number of researchers used the scale to assess service quality of service organizations (Kim et al 2008) The SERVQUAL instrument has been the predominant method used to measure consumers’ perceptions of service quality

In the present study, the scale instrument by Kayaman & Arasli (2007) was used mainly for brand loyalty, perceived quality, and brand image because their scale measurement has been most widely accepted and validated For the measurement of the perceived quality component Kayaman & Arasli (2007) based

on SERVQUAL scale with twenty-two items developed by Parasuraman et al (1988) For the measurement of brand loyalty and brand image, Kayaman & Arasli (2007) based on Kim & Kim (2005) study Specially, for the measurement of the brand awareness, the scale measurement by Kim, Jin-Sun and Kim (2008) was employed Generally, the scale measurements of Kayaman & Arasli (2007) and Kim, Jin-Sun and Kim (2008) were adopted in the present study because of the fit setting in consideration of the education and training industry as the service industry and based on Aaker’s model of customer-based brand equity Moreover, they were accepted newly Four elements of brand equity were measured through

a customer survey

2.5 Relationships between brand loyalty and other dimensions of CBBE

Brand loyalty is one of the most important competitive survival tools because loyal customers provide: repeat business, higher market shares and profits, referrals, and competitive advantage (Tepeci 1999, cited Kayaman & Arasli 2007)

Firstly, the relationship between brand awareness and brand loyalty is investigated in this study Aaker (1991) defines brand loyalty as the attachment that a customer has to a brand While Aaker (1991) also suggests that brand

awareness refers to the ability for a buyer to recognize or recall a brand is a member of a certain product category and loyalty begins with the customer’s becoming aware of the product Higher levels of brand awareness and positive brand image should increase the probability of brand choice, as well as produce greater customer loyalty and decrease vulnerability to competitive marketing actions (Keller 1993) Hypothesis 1 is therefore constructed as:

H1: Brand awareness is positively related to brand loyalty

Secondly, the relationship between perceived quality and brand loyalty is investigated Zeithaml (1998) suggests that service quality is the customer’s judgment about the overall excellence or superiority of a service Therefore perceived quality provides value to customers by providing them with a reason to buy and by differentiating the brand from competing brands (Kayaman & Arasli 2007) The fact is that customers’ perception of quality will be associated with their brand loyalty Kayaman & Arasli (2007) asserts that customer is likely to perceive the brand as offering superior quality will become more brand loyalty Perceived quality and brand loyalty relationship is summarized in the following hypothesis:

H2: Perceived quality is positively related to brand loyalty

Finally, one of the first steps in maintaining customer brand loyalty is to build and sustain a positive brand image or vice versa (Kayaman & Arasli 2007) Based on attitude theory, brand association is proposed to have a positive relationship with brand trust (Ajzen & Fishbein 1980, cited in Quan 2006) The fact is that customers would not trust the brand if they wouldn’t hold the image of the brand Therefore, the positive image of a brand in customers’ perceptions is a necessary condition leading to good feelings toward the brand On the other hand, brand image is a set of brand associations in customers’ minds Moreover, based

on consumer-based brand equity theories, the positive association held in the customer’s mind will constitute the positive feeling of customers (Wood 1998, cited in Quan 2006) that refers to a strong internal disposition toward the brand Based on these arguments, hypothesis 3 is stated as follows:

H3: Brand image is positively related to brand loyalty

Figure 2 7 The relationship between brand loyalty and other dimensions

2.6 Summary

The previous discussion has confirmed the importance of brands in terms of the customer Customer-based brand equity is defined as the effect of brand knowledge on the customer’s response to the marketing activities of the brand Four components, namely brand awareness, perceived quality, brand image and brand loyalty, are considered to make up customer-based brand equity Brand awareness, perceived quality and brand image act as antecedents of brand loyalty, firstly The effect of these components on brand loyalty is investigated Secondly, the mean difference of each dimension of brand equity as well as each underlying

+H2

+H3

+H1

Brand Loyalty

Perceived Quality

Brand Awareness

Brand Image

attribute between high and low tuition ETCs respectively needs to identify Eight hypotheses have been proposed, and are summarised in Table 2.1 The methodology utilised to test the eight hypothses is presented in the following chapter

Table 2 1 Summary of hypotheses

H1: Brand awareness is positively related to brand loyalty

H2: Perceived quality is positively related to brand loyalty

H3: Brand image is positively related to brand loyalty

H4: There is the difference of brand awareness of CBBE between high tuition fee ETCs and low tuition fee ETCs

H5: There is the difference of perceived quality of CBBE between high tuition fee ETCs and low tuition fee ETCs

H6: There is the difference of brand image of CBBE between high tuition fee

ETCs and low tuition fee ETCs

H7: There is the difference of brand loyalty of CBBE between high tuition fee ETCs and low tuition fee ETCs

H8 There is the difference of attributes of dimensions of CBBE between high tuition fee ETCs and low tuition fee ETCs

Chapter 3 Methodology

3.1 Introduction

The literature review in the previous chapter introduced and discussed the theoretical model constructed for this research Four main constructs are considered in this study: brand awareness, perceived quality, brand image, and brand loyalty The three research questions and eight hypotheses were proposed to test an empirical study of the English training industry presented in Table 3.1

Table 3 1 Research questions and research hypotheses

Q1 Is there a relationship between brand loyalty and the other dimensions of

brand equity in the system of English training industry?

H1: Brand awareness is positively related to brand loyalty

H2: Perceived quality is positively related to brand loyalty

H3: Brand image is positively related to brand loyalty

Q2 Is there any difference of the brand awareness, perceived quality, brand

image, and brand loyalty of CBBE between high tuition fee ETCs and low tuition fee ETCs?

H4: There is the difference of brand awareness of CBBE between high tuition fee ETCs and low tuition fee ETCs

H5: There is the difference of perceived quality of CBBE between high tuition fee ETCs and low tuition fee ETCs

H6: There is the difference of brand image of CBBE between high tuition

fee ETCs and low tuition fee ETCs

H7: There is the difference of brand loyalty of CBBE between high tuition fee ETCs and low tuition fee ETCs