The Effects of Brand Orientation of Furniture Manufacturing

Firms on Brand Distinctiveness and Brand Performance

Norzanah Mat Nor a, Syed Jamal Abdul Nasir b, Puteri Fadzline Tamyez c

aUniversiti Teknologi MARA, Shah Alam, Malaysianorzanah@salam.uitm.edu.my

bUniversiti Teknologi MARA, Shah Alam, Malaysiasyedjamal145@salam.uitm.edu.my

cUniversiti Teknologi MARA, Shah Alam, Malaysia120rahmat@gmail.com

Abstract

This study aims to examine the influences of brand orientation and brand distinctiveness on brand

performance. Proportionate stratified random sampling was used to collect data of 550 furniture

manufacturing firms. It was found that brand orientation of the furniture manufacturing firms have

positive and significant relationships with brand distinctiveness and brand performance. This indicates

the more oriented their brand are, the more distinctive and better performance are their brands. Brand

distinctiveness was revealed as a mediator between brand orientation and brand performance. Hence,

this study provides important findings through the integration of these variables towards brand

performance within the furniture firms in Malaysia.

Keywords: Brand performance, Brand orientation, Brand distinctiveness, Furniture Firms, Brand Strategy

Introduction

The Malaysian furniture industry is known as one of the largest contributors of the country’s economic

growth albeit being classified as a low-tech industry (Unit, S. I., 2011). Robiyah, H. (2012) and Kam, L. V., & Heng, L.

C. (2010) revealed that Malaysia has become a star performer of the timber industry and witnessed accelerated

growth with its eighth rank in Malaysia’s furniture export (Brandt, T., & Wei, C. S., 2012). This rapid change of

economy is having a serious implication to the industry as it still needs to endure the fierce competition with low cost

producers of China and Vietnam (Brandt, T., & Wei, C. S., 2012). Apaydın, F. (2011) identified a number of elements

that need to be focused upon on the industry which are design expertise, research and development, brand,

infrastructure and logistics, manufacturing competence, value for money, easy access to resources, and trained

manpower. More importantly, there has been little attention directed toward their brand orientation and

understanding how brand distinctiveness positively mediates between brand orientation and brand performance.

Against this backdrop, the aim of the study is to investigate mediating effect of brand distinctiveness between brand

orientation and brand performance. Apart from that, this study is to examine the role of brand orientation in the

furniture firms and their brand performance relationship. The significant interactions were investigated based from

previous studies that confirmed the important role of brand orientation and brand distinctiveness have in brand

performance (Mosmans, A., & van der Vorst, R., 1998; Wong, H. Y., & Merrilees, B., 2005; Keller, Kevin Lane,

Sternthal, B., & Tybout, A., 2002; Olson, C. , 2004; Warlop, L., Ratneshwar, S., & Osselaer, S., 2005; Davčik, N. St., &

Rundquist, J., 2012). By proposing and subsequently testing the structural relationships of the conceptual framework

with these three constructs, this study is intended to achieve the following research objectives: (1) to examine the

influence of brand orientation of furniture firms on brand distinctiveness (2) to investigate the effects of brand

distinctiveness on brand performance, (3) to access the influence of brand orientation on brand performance, (4) to

evaluate the mediating effect of brand distinctiveness between brand orientation and brand performance.

Literature Review

Figure 1 depicts the proposed hypothetical causal model for the current study. Numerous authors have also

discussed on clustering the brand performance literature along financial, customer and employee dimensions (Aaker,

1991; Ambler, 2003; Chaudhuri & Holbrook, 2001; de Chernatony, L., Harris, F. & Christodoulides, 2004;

Ehrenberga, Unclesb, & Goodhardta, 2004; Keller, 1998; Kim, H.-B. et al., 2003; KL, 1993; Munoz & Kumar, 2004;

O’Cass & Ngo, 2007; Weerawardena, O’Cass, & Julian, 2006).

Some scholars determine brand performance through the customers’ perspective of their awareness and image

towards a brand (Aaker, 1996; Keller, 2003). Hu, Chang, Hsieh, & Chen (2010) stated that brand performance

acquired intangible assets apart from tangible assets in a product itself. According to Collins & Montgomery (1995);

Delaney & Huselid (1996); Hamel & Prahalad (1989); Hu et al. (2010); Penrose (1959); Wong & Merrilees (2007) ,

brand performance acts as a tool to measure the level of accomplishment and success of an organization mission and

objectives within the market. Subjective judgments need to be carried out to assess the firm’s performance where the

ultimate objective is to improve a firm’s finance and profits.

Brand performance indicates a strength of a brand as revealed by O’Cass & Ngo, (2007) as well as a

shareholder value (Madden, Fehle, & Fournier, 2002). The strength of a brand is a combined measure towards brand

equity that consists of three sets of metrics- knowledge, preference and financial. A number of studies have been

conducted to explore factors that contribute to brand performance through the importance of employees’ involvement

in brand building. Firms that deeply involves employees must have a deeper focus on brand management to drive

better brand performance (Burmann & Zeplin, 2005; Gapp & Merrilees, 2006).

Consumer orientation, differentiation, brand knowledge and strategy are the four factors that contribute to a

brand success as stated by Davčik & Rundquist (2012). It is inappropriate to measure it in terms of economic

elements. Some researchers suggested to access in terms of brand awareness, reputation and loyalty . Another model

describes brand orientation and brand distinctiveness as a backbone to brand-marketing performance, with the

addition of brand barriers as a main factor for under-investing SMEs to build distinctiveness in their brand strategy.

Thus, higher brand barriers and the lowest brand orientation will result to become minimalist SMEs.

The second type of SMEs are embryonic firms that obtain higher levels of brand distinctiveness and the third

type are integrated SMEs that has the strongest brand distinctiveness and brand orientation (de Chernatony &

McDonald, 1998). There are two categories that constitute the measurement of brand performance; which are

business-based performance and customer-based performance.

Brand performance can also be accessed through financial value, equity, or through brand report card by

Wong & Merrilees (2005) or on the brand building process by Carvalho (2007) or brand metrics . A combination of a

few assessments will enhance the evaluation of their brand performance . have identified factors to enhance brand

performance through roles of employees and corporate marketers. Apart from that, De Mortanges & A. (2003) and

Madden et al.(2002) revealed that values of shareholders increases with the strength of a brand. This will further

increase the level of resources of the brand team.

Another study has been carried out by indicating a synergy of both market orientation and innovative

culture that are able to pursue for a better brand performance. Besides that, sales growth, profitability, training,

marketing communications, product development and market share as measurements of financial performance are

also other indicators to reflect brand performance (Aaker & Jacobsen, 1994; Jain, 1989; Keller & Lehmann, 2003;

Keller, 1993; Lassar, Mittal, & Sharma, 1995; Simon & Sullivan, 1993).

“Brand Value Chain” is another measurement of brand performance through six factors introduced by Keller

(2003). These include flexibility of prices, price premium, brand extension rate, market share, profit capability and

cost structure. Four stages covers the “Brand Value Chain” which are the investment of marketing plans, customers’

attitudes, brand performance, and shareholder value (Keller, 2003). More precisely, brand marketing performance

may be examined through the firm’s financial value by Feldwick (1996), on its equity by Aaker (1996), brand report

card by Keller (2000) or on brand building process by de Chernatony (2001) or the combination of all (de

Chernatony, 2001).

Some measurements on brand performance focus on customers’ evaluation through attitudes and

preferences on brand choices (Ghosh, Chakraborty, & Ghosh, 1995). From the customers’ perspective, certain brands

depends on their knowledge and experiences where most customers acquire very little knowledge on brands

(Zeithaml, 1988). There are many marketing literature that focuses on consumer behavior in terms of how they

evaluate their brands and also in the usage of Dirichlet benchmarks (Bettman & Park, 1980; Ehrenberga, Unclesb, &

Goodhardta, 2004; Smith & Bristor, 1994). Dirichlet benchmarks particularly involves the shopper as the buyer and

purchases over a fixed period of time such as month or year (Ehrenberga, Unclesb, & Goodhardta, 2004; Rungie &

Goodhardt, 2004).

On the other hand, brand metrics are comprehensively related with the brand measurement system where it

heavily links to brand management and business performance. It merely acts as a static snapshot but a continuous

improvement of brand performance. It comprises of 5As which are brand awareness, acquaintance, association,

allegiance and appraisal are brand performance indicators which spread over financial, performance and perceptional

(Rajagopal, 2008).

Another brand performance index is proposed by Aaker (1991) from the viewpoints of markets and products.

It is called as “Brand Equity Ten” which consists of five categories; brand loyalty, brand awareness, brand perception,

brand association, and market behavior. indicated a measurement of overall performance of brands through the

application of brand scorecard and brand metrics strategy. The performance of a brand is also dependent on the

attributes of both product-related attributes and non-product-related attributes (Keller, 1993). Satisfaction is an

element that customers search for as a choice in a brand (Doyle, 1990). Other scholars such as Arjun Chaudhuri &

Holbrook (2001); Reid (2002); Wong & Merrilees (2007) view a brand’s performance from the perspective of brand

reputation, awareness and loyalty.

This research is taking a non-financial measurement into account for its long term benefits to one’s company

as opposed to financial results that are fast and familiar for managers. The most beneficial effect of non-financial

measures such as the brand performance measurement is the ability to balance factors within and beyond their

control. In comparison to financial accountability that are often affected by external forces like economic and market

changes, non-financial measures provide a better control of the organization as it is less susceptible to external

changes and managers are able to improve their strategies within their objectives and vision of organization

(Pangarkar, Ajay M. & Kirkwood, Teresa, 2006). The model of the study examined the structural, causal relationships

between brand orientation of furniture firms, brand distinctiveness and brand performance as researched by Wong &

Merrilees (2007). Hypothetically, brand orientation influences brand distinctiveness and brand performance. In

addition, brand distinctiveness influences brand performance, as illustrated in Figure 1:

Figure 1: Proposed Hypothetical Model

Hypotheses

On the basis of preceding findings, the following is hypothesized:

Hypothesis 1: Brand orientation has a positive effect on brand distinctiveness

Hypothesis 2: Brand distinctiveness has a positive effect on brand performance

Hypothesis 3: Brand orientation has a positive effect on brand performance

Hypothesis 4: Brand distinctiveness mediates between brand orientation and brand performance

Research Methodology

To test the hypothesis, questionnaires were distributed to furniture manufacturing firms in Malaysia to

answer the questionnaire. The selection of the furniture industry in Malaysia in this study is due to the fact that this

sector is one of the major contributors to the Malaysian economy. Knowing that the Malaysian furniture industry still

applies OEM (Original Equipment Manufacturing) approach identified by , the subjects of branding and innovation

revealed by Nor et al. (2012) has become a developed interest among the government agencies and manufacturers

which should be investigated seriously and critically as one of the positive steps in increasing the competitiveness for

the economy.

550 questionnaires were distributed using a survey methodology based on the stratified random sampling of

the population of furniture manufacturing firms. The study utilized a survey approach, with self-administered

questionnaires, which were distributed through mail. For each sample company, the appropriate respondents (CEO

or marketing managers) were identified and contacted. This is due to their extensive knowledge particularly CEOs

that act as brand ambassadors by involving in the decision-making process on their branding and design innovation

activities (Roll, 2006a). The questionnaires include three constructs namely brand orientation, brand distinctiveness

and brand performance. The scales were adopted from the extent literature due to their relevance to the study context

Brand Orientation

Brand Orientation

Brand Distinctiveness

Brand Distinctiveness

Brand PerformanceBrand Performance

and their reliability. A five-point scale was used ranging from strongly disagree to strongly agree. There are 7 items

measuring brand orientation, 7 items for measuring brand distinctiveness, and 5 items to gather information on

brand performance. These items are taken as frame of reference of the study of Wong & Merrilees (2008).

Results

The structural model was tested to assess the hypothesized structural relationships of the three (3)

constructs. This model was tested using AMOS and with some modification it showed a good model fit (CMIN=1.273,

TLI= 0.961, GFI= 0.803, RMSEA=0.037, NFI= 0.856), in comparison to the original model by Wong and Merrilees

(2008), which indicates a good model fit of χ² value of 98.70 the freedom of 48, AGFI= 0.94, RMSEA = 0.05, IFI =

0.98, and NFI = 0.97. It is indicated that all hypotheses were significant in the hypothesized tests. The relationship

between brand orientation and brand distinctiveness was significant and positive (standardized regression

coefficient= 0.655, standard error =0.104, p-value is ≤ .05) and thus supporting H1. H2, which link between brand

distinctiveness and brand performance was also significant (standardized regression coefficient= 0.127, standard

error =0.127, p-value is ≤ .05). This result thus provides support for H3. Likewise, H3, which is the relationship

between brand orientation and brand performance was also supported (standardized regression coefficient= 0.388,

standard error =0.122, p-value is ≤ .05).

Table 1: Results of the tested hypotheses

Hypothesis Hypothesized Paths Standardized Coefficient S.E Result

H1 Brand orientation Brand distinctiveness 0.655 0.104 Supported

H2 Brand distinctiveness Brand performance 0.127 0.127 Supported

H3 Brand orientation Brand performance 0.388 0.122 supported

The simple effects of brand orientation on brand performance are tested. The output shows brand orientation is

0.388 and it has a significant effect on brand performance (p-value < 0.001), as shown in Figure 2.

Figure 2: The direct effect of brand orientation on brand performance

Secondly, the potential mediator variable brand distinctiveness is entered into the model as shown in Figure

3. The direct effect of brand orientation on brand performance is reduced from 0.388 to 0.088 when brand

distinctiveness entered the model. Now the direct effect on brand performance is no longer significant (p-

value=0.519). Here, the requirement for complete mediation is met, as shown in Figure 3 as the mediating effect of

brand distinctiveness between brand orientation and brand performance.

Figure 3: The mediating effect of brand distinctiveness between brand orientation and brand performance.

Discussion and Conclusions

Findings in this study indicate all four hypotheses were supported by the data. The result of analysis is

harmonious with Wong, H. Y., & Merrilees, B. (2008)’s study which demonstrates a similar pattern for brand

orientation influencing brand distinctiveness. However, it must be understood by firms that orientating a brand need

to be regarded as a process rather than a project (Reijonen, H., Laukkanen, T., Komppula, R., & Tuominen, S., 2012).

A number of studies have investigated the effect of brand orientation on brand distinctiveness and support the view

that an increased level of brand orientation will drive better brand distinctiveness in a firm ( Krishnan, H. S., 1996). As

a result, brand distinctiveness is not only a determinant towards brand performance, but also brand equity and

success as stated by Keller (1998) cited in Baumgarth, C. (2008).

Brand orientation is positively associated with brand performance, providing opportunities to expand

theories developed in the West to the Malaysian context. This result supports and validates the recent studies of

Wong, H. Y., & Merrilees, B. (2008). Orientating a brand in a firm that will reflect a change in a customer’s taste is

indicated as a brand that is positioned before the competition enters the market. However, to escape from a mature

original market or a decline of market, a firm must consider a long-term perspective by investing the brand over a

long period of time (Jobber, 2003). The finding also accords with earlier observations by Tuominen, Laukkanen, &

Reijonen (2009), who highlighted that brand-oriented firms have higher brand performance than firms that are not

orientated on brand and markets.

Brand distinctiveness plays as a mediator between brand orientation and brand performance. This result is

congruent with the study of Carvalho, R. P. G. (2007) who asserts that brand orientation must be equipped with its

distinctivenees to create a stronger brand performance. Bridson & Evans (2004) conducted a study on brand

orientation through the perspective of fashion retailers’ brand orientation. They mentioned the importance of

instilling a symbolic reflection of customers and a source of value adding as being distinctive towards greater brand

performance. Doyle (1990) reflects brand distinctiveness as an indicator of a firm’s success by producing distinctive

products than what are delivered by the competitors. Weerawardena et al.(2006) consider this element as motivation

for firms to look for innovative ways to produce innovative products and further leads to a stronger brand. It is also

one of the potential marketing force for company’s success in the long run. This research has contributed to extend

the framework brand strategy adapted by Wong, H. Y., & Merrilees, B. (2008) and Keller, Kevin Lane, Sternthal, B., &

Tybout, A. (2002) in the furniture industry context.

Acknowledgements

The authors would like to acknowledge the help and support of the Malaysian Furniture Promotion Council (MFPC),

Malaysian Timber Industry Board (MTIB) and fellow respondents who participated in this study.

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