Antecedents of Brand Equity in Relation to Product Sales Involving User Generated Content
Irsa Mehboob and Ch. Zia-ur-Rehman
Institute of Business Administration, University of the Punjab, Lahore, Pakistan
Purpose – This study is conducted to investigate the effect of brand equity as a mediating variable on the consumer purchase decision making behavior, along with user generated content
Design/methodology/approach
The variables undertaken in this research were word of mouth, channel of media, past experiences, purchase intent, and, buying class and selling situation. The data was collected collected from 500 students in the University of the Punjab, along with online responses from other students in other universities, to get a more rounded audience for this research. The data was collected using close-ended questionnaire. A cross-sectional population was analyzed using techniques like Pearson correlation, Cronbach’s alpha, A.F Hayes Process. Although the sample was chosen using convenience sampling, it was well categorized into different age groups ranging from 18-26 years, varying qualification level from bachelors to PhD, income groups, professions, and other groups such as students and professionals, etc.
Findings – The statistical analysis of the data reflects that with brand equity as a mediating variable, all the independent variables have a significant impact on the dependent variable i.e. consumer decision making process.
Research limitations/implications –Although this paper uncovers the determinants of the brand equity and consumer decision making process in a very systematic way, it does have certain limitations as per using the convenience sampling. Future research may try to overcome such shortcomings by specifically targeting buyers who have a greater influence involving user generated content.
Keywords
Consumer decision making, brand equity, word of mouth, user generated content, user content, consumer buying behavior, effect of brand equity, purchase decisions, past experiences, purchase intention
CHAPTER 1: INTRODUCTION
Introduction
In the modern world, one of the fastest growing trends is writing online reviews for products. Many YouTube channels and Facebook pages are simply dedicated to trying out new products and then writing what they think about the said product. Other than that, there are Instagram accounts and twitter accounts that provide reviews and demonstrations for suing a product. In the digital fishbowl that is the world right now, it is the fastest means of providing information to people. A long time ago, the only way to learn about a new product was to either try it out, or through word of mouth from a friend and family. The word of mouth or the WOM trend has not yet been surpassed but has taken a new form, called eWOM, or electronic word of mouth. To put is simply, consumers are now greatly affected by what they read on the internet about a product. There are many factors that help a consumer make a decision about a purchase. Not only eWOM or WOM, but also what channel of media they are getting the content from, along with their purchase intention greatly affects their final decision. Another major factor is their past experience with the brand or any product. If a person has had a good experience in the past and has also seen positive reviews about that product, they will be more inclined to make a positive purchase decision about that product. One very significant factor that helps people make up their minds about buying or not buying any product is the brand equity of that brand. Defined simply, brand equity is the value that is generated by having a well-known and well trusted brand name. What this means is that the more well-known your brand is, the greater the value of this brand is. This term is usually used in marketing circles to understand the value a brand creates. When a brand has high brand equity, consumers believe that any product launched by said company will be a good and trustable product. Positive user generated content, along with great brand equity should be able to help consumers make quick and positive purchase decisions, and this is what this paper hopes to prove.
Significance of the Study
As this is the digital age, people are greatly affected by and choose to trust the information that they receive online, about any product, goods or service. Brand equity is also a great part of that decision making process that allows a consumer, even after reading a bad review, to decide whether or not they want to buy that product. The significance of this research is that we hope to allow companies to see how people are affected by a combination of user generated as well as company generated content over the internet in with brand equity, so that they can influence their customers for the better, either through building better brand equity or through influencing their online presence into the mind of their potential consumers.
Research Questions
The research questions that this study intends to look into include the following. These questions were influenced by the literature that was reviewed along with the intent that we started this research with.
- How does user generated content affect the purchase decision making of the consumer?
- How does negative content affect the consumer purchase decision?
- How does brand equity affect the decision making process of the consumer, given that they are significantly influenced by user generated content?
- What is the most trusted form of user generated content, i.e. word of mouth, or social media?
- How do purchase intentions and past experiences get affected by brand equity?
CHAPTER 2: LITERATURE REVIEW
Literature Review
The literature review is as follows, starting with the dependent variable, then the mediating variable, and then the five independent variables:
Consumer Decision Making Process
Consumer purchase behavior can be defined as the activities through which people decide to, possess consume, and eventually dispose of certain goods and services. Consumer buying behavior is one of the most researched topics as of now, considering that it is one of the most diverse and ever-changing studies. Most often, consumer behavior changes due the growth in international trading as well as the acceptance that has been built into people due the new brands and varieties of one product. Most studies, however, focus greatly on one country, or region. (Blackett, 1993)
Consumer decision making is done on two levels: one, for utilitarian or common use products, and the second, for experiential or new products. Most people buy utilitarian products based on their functionalities, which can be specific or general. Decision making for such goods tends to be driven by cognition, being goal-oriented and instrumental to fulfilling a need (Strahilevitz and Meyers 1998). Compared to these, products that are experiential, which also represent the facet of consumption that is hedonism, are bought after a decision making process that involves aspects like pleasure, both sensual or aesthetic, along with the concepts of fun and fantasy(Hirschman and Holbrook 1982). Consumers evaluate such products based upon personal as well as emotional fronts.
To make a decision, consumers will seek different kinds of information and this information will be processed differently too, depending on whether the product is experiential or utilitarian (Huang, Lurie, and Mitra 2009). As concerning the nature of the utilitarian products, the online reviews in this class can be expected to be objective and based on facts, most probably due to the fact that they are from reality and reflect the functionality-driven experience of the consumer. As opposed to this, reviews for experiential products, due to the nature of these products will tend to be more emotional and subjective. These reviews will reflect a more personal experience with the product, as well as personal taste. Consumer decision making will be based on a more personal scale. These characteristics in an experiential products’ review can, however, introduce an idiosyncratic noise to the product advice by the reviewer, and this can actually undermine the review, and affect the decision. According to Sen and Lerman(2007), every time the readers are evaluating reviews of any product, they often attribute motivations of the reviewers to the review instead of attributing it to the product and its related factors. So, in comparison to reviews for utilitarian products, consumers often have fewer efficacies for experiential product reviews.
One of the most profound transformations that have been made in the way customers decide and buy a product has been made through the influx of the internet. It has completely changed the way customers experience and consume products (Grewal and Levy 2009). Grewal and Levy, 2009, also say that one of the deciding factors for consumers is now product reviews that people not only seek, but also post on the internet. Mostly these opinions are in the form of word of mouth reviews called eWOMand have become a greatly helpful tool for decision making for the consumers.
This trend has been observed by retailers as well, the fact that consumers incorporate the online product reviews into their final decision, and now these retailers are trying to incorporate eWOM into their own marketing regimes, so that they can use this as a new and effective marketing tool. Many retailers now welcome consumers to post reviews on their own websites. Another way these consumers are incorporating eWOM into their marketing mix to influence customer decision making is through asking third parties to provide information about their products for customers (Dellarocas, 2003).
A report made by the research firm Nielsen in 2012 indicated that up to 70% customers trust the product reviews they read online. This shows that eWOM is greatly influential in consumer decision making process. According to Guernsey, 2000, opinions are posted online in a vast variety of topics, products and services. These include airlines, resorts for vacationing, movies, hotels and restaurants, telephone operating companies, and even stocks. Guernsey also says that the number of people utilizing online reviews and recommendations in their decision making is greatly rising. The ability of consumers to communicate with others and tell them their views has limited the amount of control that organizations have over their decision making processes and what information these consumers have access to.
Another thing that is greatly affective on consumer decision making is the use of IMC or integrated marketing communication that communicators follow as a guiding principle to be able to effectively reach their target markets. According to Boone and Kurtz, 2007, marketers using IMC make an attempt to control as well as coordinate all the elements of the promotional mix- advertising, direct marketing, sales promotion and public relations and personal selling- to produce a message that is not just customer focused but also achieves objectives of their organization.
A decisive factor in consumer decision making is the innovativeness level of the customer. The higher the level of innovation of the customer, the more sensitive and receptive they will be related to the innovation level of a product. This makes them more knowledgeable about new and innovative products. Such customers also have the tendency to make “innovative decisions independently of the communicated experience of others” (Midgley and Dowling 1978, p. 235). The process is called product diffusion, which is the social process due to the interaction between these mentioned innovators and their social followers, makes these innovative customers a source of valuable information and advice, making them indispensable to the followers purchase decision making process (Bass, 1969).
A large body of work stands to indicate that the more innovative the people are, the larger and stronger the position of opinion leaders they hold in any community making them the base of many customers’ buying process (e.g., Flynn, Goldsmith, and Eastman 1996; Goldsmith and Hofacker 1991). As Rogers, 2003, point out, however, these roles of opinion leaders depend on the social distance that is between the followers and the innovator.
Brand Equity
Brand equity is one of the most important terms for managers. It directly pertains to what the brand holds in term of its market and its competitors. Brand equity can be considered a reservoir, which holds the brand loyalty and trust of the consumers. Brand equity is affected by brand trust, the awareness of it among consumers and the loyalty it holds in the market. Brand equity is getting quite an attention in the past few years. Due to its direct effectiveness it is quite popular in discussion among researchers. In a market, a consumer is exposed to various brands. Then why does a consumer choose a specific brand if all other things such as price, quality, service are almost equal. That I answered by brand equity; that is how much trust and loyalty a brand hold in the consumer’s mind. Companies now a day’s create and focus on their brand equity. All the promotions, ads, direct marketing efforts or free give always are the causes to create brand equity. Thus, brand equity is said to have two perspectives among researchers. First one is the financial perspectives. The mergers, acquisitions of brands, investing in existing brands, its cost and ROIs all are the part of its financial perspectives. The second one that holds the most importance to marketers is the behavior of the consumers; the cognitive effects that the consumers hold in relation to the brand. The decision the consumer makes when exposed to several brand at the same time and offering the same thing to them. The mindset of the customer assesses the awareness, attitudes, relations, supplements, and loyalties that customers have toward a brand . This has been the focus of a lot of academic research (e.g., Aaker 1991, 1996; Ambler and Barwise 1998; Keller 1993) Brand equity consists of brand awareness, brand loyalty, brand recall. Or in other words we can call them brand equity measures. Brand awareness is how much a consumer is aware of the brand’s positioning. What he/she knows about the brand and does he perceive the right thing about the brand. This thing ensures that the correct positioning is done in consumers mind because it will directly affect the brand equity creation techniques e.g. advertisements. Brand awareness can also be said as educating the consumers about the brand. This is done majorly by advertisements and giving information to the consumers. Brand loyalty which is often viewed as a dimension, source, indicator of brand equity (Aaker, 1991; Keller, 1993, 1998), can be conceptualized as a desired outcome of brand equity. Brand loyalty is how much a consumer is loyal to a brand. It comes under the head of brand equity. How much a consumer sticks to a brand in relation to what other brand are offering. E.g. if competitors offer lower price or any kind of trade promotions ; how much a consumers sticks and purchases a particular brand by ignoring competitors offers. This is brand loyalty. Brand recall is how much a consumer is able to recall a particular brand due to its color or sound. It’s the symbolic structure recall in the mind of the consumer. This helps in the branding of the product.
Customer brand equity is mostly psychological as consumers are more emotional than rational. They are greatly affected by brand personality and brand positioning. Consumers are likely to buy a brand that matches their personality. E.g. A sportsman will prefer strong, rigid and powerful brands. Thus brand equity plays a vital role in making product sales in this case. As brand equity focuses on all the aspects that the product is offering to the consumer so it is of great importance to the marketers and researchers. Thus companies nowadays hire brand managers. They are hired to create and manage the brand equities. Even brand equity managers positions are created due to the vital importance of it. Brand equity is measuredas a key indicator of any brands state of health, and its monitoring is an essential step for effective management of a brand (Aaker, 1991, 1992). Brand equity is also affected by the country of origin of the brand i.e. in which country the brand is made or manufactured. Given the credibility of different countries in global markets, country of the brand plays a role in determining the expectations about a brand. Consider a brand that is unknown to a consumer, then its country of origin along with other factors will help in building brand image and product expectations in the minds of the consumers. This also depends on the type of product whether it is a clothing product or an electronic product.
Word of Mouth
Word of mouth has got a great importance with the digitalization of markets and information. Consumers have become quite powerful in today’s markets due to the access of information and communication channels. Word of mouth is considered a powerful driver for sales as it directly affects consumer behavior and is thought to be quite credible as compared to other sources of information e.g. ads. Word of mouth normally doesn’t directly come from the company but it can be done as the companies sometimes generate word of mouth in the market about their products. Word of mouth is quite old. In past days people used other people’s reviews in making a purchase. But due to internet it has achieved greater importance and significance. One calls it “the world’s most effective, yet least understood marketing strategy” (Misner 1999). Thus companies now a day’s give greater importance to word of mouth. If we see the impacts of word of mouth then, one customer can create ten or lose ten customers only due to word of mouth. Normally word of mouth comes from two sources. One is the personal sources and the second are the non-personal sources.