THE RELATIONSHIP OF BRAND EQUITY TO PURCHASE INTENTION THE RELATIONSHIP OF BRAND EQUITY TO PURCHASE INTENTION

Electronic copy available at: http://ssrn.com/abstract=1935740

0

http://ssrn.com/abstract=1935740

THE RELATIONSHIP OF BRAND EQUITY TO PURCHASE INTENTION

Uthayakumar Tharmi

and

Samithamby Senthilnathan

Abstract: This study empirically examines the relationship between Brand Equity (BE) as the

independent variable and Purchase Intention (PI) as the dependent variable in relation to

branded baby soaps selectively. While both the variables individually have high level

attributes of the customers, the Pearson’s correlation analysis explores a positively

significant linear relationship between BE and PI. This implies that the PI of a customer for

purchasing branded baby soap can be predicted with the customer’s nature of BE. The

correlation coefficient between the BE and PI indicates that the BE of a customer is useful to

explain the variation in PI of a customer. Further analysis of regression model with intercept

indicates that it needs additional suitable variables to predict unexplained variation of 68%

of the PI. However, the model without intercept indicates that BE alone can predict the PI by

explaining its more than 99% variation.

Key words: brand equity, purchase intention, decision making process,

JEL code: M30, M31, M37, M39

U. Tharmi is attached to Discipline of Marketing, Department of Management in Eastern University, Sri Lanka. S. Senthilnathan is a Senior Lecturer in Management, Eastern University, Sri Lanka Your comments are welcome to improve this paper further, please e-mail: [email protected] or

[email protected].

mailto:[email protected]

mailto:[email protected]

Electronic copy available at: http://ssrn.com/abstract=1935740

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THE RELATIONSHIP OF BRAND EQUITY TO PURCHASE INTENTION

1. INTRODUCTION

Customers’ positive feelings on a product brand create purchase intention of the customers

(e.g., Aaker, 1991; Assael, 1998; and Wang and Kan, 2002). According to Farquhar (1989),

brand equity is meant for ‘an added value or asset to a brand and product’ and such a value

is made of ‘customers’ positive feelings, thinking, and acting towards purchasing a product’.

Since purchase intention is a result of brand equity, this study attempt to explore the positive

relationship between the Brand Equity (BE) and Purchase Intention (PI) in the Sri Lankan

context.

Sri Lanka was the first market to have open economic policy in South Asian developing

countries. To be specific, Bilkey and Nes (1982) indicate that consumers in developed

countries have preference for domestic products over foreign products, while consumers in

developing countries are more likely to prefer foreign products than domestic products.

Therefore, the market in Sri Lanka has been in intense competitive situation as the high

quality and international branded products are expected to do better than domestic products.

For a good product, there should be brand loyalty and BE. Any product with high BE can

capture the high market share in Sri Lanka. It is explicit that some of the best- known brands

can be found simply in retail firms, outlets and super markets in Sri Lanka.

Kotler and Keller (2006) define that brand can be ‘a name, term, sign, symbol or design, or a

combination of them’ that can be useful to identify the goods or services from suppliers in

view of differentiating those suppliers from their competitors. Therefore, they indicate ‘a

brand is a product or service that adds dimensions that differentiate it in some way from other

products or services designed to satisfy the same need’.

According to Ukpebor and Ipogah (2008), a powerful brand influences attitudes of customers

and makes a strong product association through the brand.1 As claimed by Vranesevic and

Stancec (2003), the importance of a brand basically highlighted through measuring the brand

impacts on choice and loyalty of consumers with the identification and differentiation of a

product’s quality, origin and additionally created values. Reardon et al. (2005) indicates that

when a brand captures attention and interest of customers as powerful as possible, the process

1 Powerful Brand = a brand of product that makes a household as being associated with a successful company.

2


can be termed as an innovation strategy and indicatively, the consumers in developing

countries, in particular, rely on brand for their purchasing, since their expectations are met

with the brands they rely on.

Nowadays in general in Sri Lanka, attitudes of people have changed to have reasonably two

babies in a family. Most of the parents consider the child’s safety first. Therefore, all baby

products are formulated for a baby to have pure and gentle protection. Because of the rising

demand for baby soaps and opening up of the market for foreign companies, many of the

world's brands of baby soaps have entered into Sri Lankan markets. Another main reason is

that Sri Lanka mostly considers the social, health and safety issues, critically. Hence, this

study considers selected baby soaps for testing the role of brand equity (BE) in determining

the purchase intention (PI) of customers.

The results of this study indicate that the BE has positively related to the PI, where the BE

explains 32% variations of PI. Further analyses reveal that the BE and PI individually indicate

a high level attributes in the mind-set of customers.

The rest of this study is organized as literature and background of the study, conceptual

framework and hypothesis, method, results and conclusion.

2. LITERATURE AND BACKGROUND OF THE STUDY

Understanding PI is often used to analyze consumer behavior in related studies. Fishbein and

Ajzen (1975) indicate it as ‘a subjective inclination’ by consumers towards a certain product

or service and that can be the crucial element for predicting behavior of consumers.

Kotler (2000) indicates that consumer purchase behavior takes place with the customer

stimulation by internal and external factors (such as choosing a product, brand, a retailer,

timing, and quantity); and the consumers make a purchase decision based on their individual

qualities, personalities, characteristics and process of decision making. This implies that

consumers’ choice of product and brand have impacts on their purchasing behavior.

The model (see Figure 1) created by Engel, Kollat and Blackwell (1984) is a process that is

used to evaluate the way of decision making by consumers. The model (known as EKB

model) implies consumer behavior as a continuing process, which includes ‘recognition of a

problem, information gathering, evaluation of alternatives, decision making and post

purchase’.

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Figure 1: Consumer Decision-Making process of EKB model

(Source: Adapted from Hawkins, Best and Coney, 2001, p.475)

Though the EKB model facilitates the purchase decision-making process, the purchase

intention is the outcome of the objective of purchase (e.g., Ariely, 2000), recommendation

(e.g., Chen and Xie, 2008), convenience (e.g., Schaffer, 2000), and results and experience

(e.g., Holbrook and Hirschman, 1982) in using the product. Hence, the PI should be evaluated

through these measures as dimensions.

According to Kapferer (2005) and Keller (2003), BE is referred to a theme of various benefits

through pieces of legal property, influencing consumer behavior, being bought and sold, and

providing owner the security for sustained future revenues. These various benefits create

values to accrue, directly or indirectly.

Creating strong BE for a particular product often makes the brand itself with having a

successful market share. This will have an impact on other brands of similar products.

Because the retail industry is highly competitive with many businesses that look for acquiring

customers, it is important that a business comes up with a marketing strategy that creates BE.

A positive and memorable brand image of a company gives its business a competitive edge.

According to Aaker (1996)(a&b), the most important factors that contribute to create BE are

brand loyalty, brand awareness, brand association, and perceived quality (see Figure 2).

Problem Recognition

Information Search

Evaluation of Alternatives

Decision/Purchase

Post-Purchase

Motivation

Learning

Memory

Emotions

Perception

Attitudes

Personality

Lifestyle

Culture

Sub-culture

Demographics

Family norms

Opinion leaders

Reference groups

Social class

Marketing campaigns

Internal Influences External Influences

4


Figure 2: Sources of Brand Equity

(Source: Adapted from Aaker, 1996(a&b), p.173)

According to Aaker (1991) and (1996)(b), the BE has a positive impact on PI of customers.

This specification has been supported by the empirical studies by Ashil and Sinha (2004) and

Chang and Liu (2009). The main objective of this study is to test whether Aaker’s (1991) and

(1996)(b) specification can be empirically confirmed in the baby soap market in one of the

main eastern cities in Sri Lanka.

In Sri Lanka, there are more baby soap brands walking down into the markets. According to

the report from Superbrands (2006 – 2008), Lanka Market Research Bureau Limited (LMRB)

indicates in its 2005 annual report that approximately more than 340,000 babies are born each

year in Sri Lanka. The report indicates that the toiletries market for newborn babies was

valued at Rs. 572 million. The baby soaps market was valued at Rs. 863 million in 2005

(LMRB, 2005) that includes the value for Pears holdings 49%, Baby Cheramy 34% and

Johnson’s Baby 3%.

According to different size of market shares for different soaps, it is obvious that all baby

soap brands have no same level and number of customers. As the BE is one of a company's

most important assets, marketers must create messages to keep consumers informed about that

their products or services are valuable and are something that persuade or influence the

customers to purchase the particular product or service at a particular moment and in the

future, thus creating the BE. Hence, this study attempt to explore the role of BE in influencing

the PI of branded baby soaps in Sri Lanka. Therefore in general, the research question of this

study is:

Whether the role of BE has positive relationship with PI of

branded baby soaps?

BRAND EQUITY

PERCEIVED

QUALITY

BRAND

AWARENESS

BRAND

ASSOCIATION

BRAND

LOYALTY

5


3. CONCEPTUAL FRAMEWORK AND HYPOTHESIS

Considering EKB model of consumer decision-making process for PI (Figure 1), the Aaker’s

(1996)(a&b) source of brand equity (Figure 2), and the positive relationship between BE and PI

as suggected by Aaker (1991) and (1996)(b) and as per the findings by Ashil and Sinha (2004)

and Chang and Liu (2009), the conceptual model of this study is devised for this empirical

investigation (see Figure 3) and this conceptual framework was supported by the studies

Rahman and Rahaman (2008) and Hoyer and Maclnnis (2001).

Figure 3: Conceptual Framework

As Aaker (1991) and (1996)(b) indicates a positive relationship of BE to PI and this

relationship is empirically supported by other studies (e.g., Ashil and Sinha, 2004; Chang and

Liu, 2009), the hypothesis of this study (see Figure 3) is:

H1: Brand equity has a positive relationship with purchase intention.

BE is considered as its dimensions as the combination of brand awareness, brand loyalty,

brand association, and perceived quality. As the EKB model (Figure 1) facilitates the

purchase decision-making process, the purchase intention finally made with objective of

purchase (e.g., Ariely, 2000), recommendation (e.g., Chen and Xie 2008), convenience (e.g.,

Schaffer, 2000), and results and experience (e.g.,Holbrook and Hirschman, 1982) in using the

product. Hence, the PI is evaluated through these measures as dimensions.

4. METHOD

4.1 Data and Sampling

Primary data are collected through structured questionnaires with closed statements measured

with Likert’s scale (1-5 as strongly disagree, disagree, marginal, agree and strongly agree,

respectively), based on four branded baby soaps (namely Pears Baby, Johnson & Johnson,

Baby Cheramy, and Khomba Baby) in the Manmunai North Divisional Secretariate (MNDS)

Division in Batticaloa District in Sri Lanka. In the MNDS Division, there are 48 Grama

Niladhari Divisions and in which, the families (7830) with babies in (0-4) age group only

considered. All 48 Grama Niladhari Divisions are considered for this study. Among 7830

families in these Niladhari Divisions, about two hundred (200) families have been identified

as a mixture of initially stratified sampling and then convenient random sampling techniques.

(+) Purchase

Intention

Brand

Equity

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4.2 Method of Data Analysis and Evaluation

4.2.1 Univariate analysis

Univariate analysis is carried out for evaluating the attributes of dimensions and variables

individually based on the response in the questionnaires. For this purpose, mean values and

standard deviation of the dimensions and variables are taken into consideration. In this

context, the following assumptions have been made.

Assumption 1

This study basically assumes that a customer (respondent) is unbiased;

this unbiased nature forms a normal distribution for population with

mean value of Xi = 3 in Likert’s Scale; and its range was estimated at the

95% confidence limit with the standard deviation of the sample.

Assumption 2

Standard deviation of population is unknown and hence, that of sample

is considered as the population parameter.

Therefore, this study initially evaluates individual characteristics of dimensions and variables.

Assessing the levels of dimensions and variables individually is one of the secondary

objectives of this study with the following criteria.

Table 1: Decision Criteria for Univariate Analysis

Where Xi = mean value of a dimension/variable, = standard deviation,

Z = value of the 95% confidence limit and x = standard error of the mean

4.2.2 Bivariate analysis

The correlation analysis was used to measure the magnitude and the direction of the

relationship between the role of BE and PI of the branded baby soaps. The significance level

of the correlation coefficient is considered to explore the meaningful linear relationship

between the variables: BE and PI.

Range for Decision

Criteria

Decision

Criteria

Decision

Attribute

Xi < (3-Z σx) Xi < 3 Low Level

(3-Z σx) ≤ Xi ≤ (3+Z σx) Xi = 3 Moderate Level

Xi > (3+Z σx) Xi > 3 High Level

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5. RESULTS

5.1 Brand Choice

Though there are many baby soaps available in the market, only four baby soaps, namely

Pears Baby, Johnson & Johnson, Baby Cheramy, and Khomba Baby, are selected for this

study. Among the 200 consumers, about 55% of buyers are with Johnson & Johnson, 25% of

buyers with Baby Cheramy, 16.5% of buyers with Pears Baby and 3.5% of buyers with

Khomba Baby (see Table 2).

Table 2: Distribution of Brand Choice

Brand Choice Frequency Percent

Pears Baby 33 16.5

Johnson & Johnson 110 55.0

Baby Cheramy 50 25.0

Khomba Baby 7 3.5

Total 200 100

(Source: Survey Data)

5.2 Brand Equity and its Dimensions

5.2 (a) Levels of brand equity and its dimensions

BE is evaluated with four dimensions: Brand Loyalty, Brand Awareness, Brand Association,

and Perceived Quality as indicated by Aaker (1996)(a&b). BE as an independent variable has

high level attribute of the customers (Mean X5 = 4.126 and see Table 3). In addition, most of

the customers expressed generally a common opinion regarding the variable of BE (standard

deviation = 0.277). With individual analysis, it is also noted that about all customers in this

study have high level attribute for the BE.

Specifically, all dimensions of BE have high level attributes of customers in relation to their

mean values (mean values of brand loyalty X1 = 4.038, brand awareness X2 = 4.183, brand

association X3 = 4.013, and perceived quality X4 = 4.273). Among these dimensions,

perceived quality accounts high value of mean and brand association is with comparatively

lower than other dimensions in contribution to BE (see Table 3).

In evaluating brand loyalty, the behavioural loyalty and attitudinal loyalty are considered as

indicators of the brand loyalty. Though their mean values (3.870 and 4.205, respectively) are

of high level attribute of the customers, attitudinal loyalty has much contributed to brand

loyalty.

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Table 3: Overall Measures of Independent Variable BE and its Dimensions

Where HL = high level attribute


In brand awareness as a dimension of BE, brand recall and recognition of the brand are

considered as its indicators (mean value of the indicators are 4.297 and 4.070, respectively).

Results indicate that the brand recall has made a high contribution to brand awareness.

Similarly, the brand association of BE has been evaluated with the indicators brand attribute,

brand image, and brand benefits (mean values of them are 4.400, 3.313 and 4.325,

respectively). The results indicate that brand attributes has highly contributed to brand

association.

The fourth dimension perceived quality is assessed with two indicators: intrinsic and extrinsic

attributes (mean values are 4.167 and 4.378, respectively). Notably, the extrinsic attributes

highly contributed to the perceived quality.

Overall, all the indicators have meaningfully contributed to determining the dimensions and

all dimensions have also highly contributed to the BE; and this is consistent with the

specifications by Aaker (1991) and (1996)(a&b) as given in Figure 2.

Description

Dimensions of BE

Brand

Equity

(X5)

Bra

nd

Lo

yalt

y

(X1)

Bra

nd

Aw

are

nes

s

(X2)

Bra

nd

Ass

oci

ati

on

(X3)

Per

ceiv

ed

Qu

ali

ty

(X4)

Mean 4.038 4.183 4.013 4.273 4.126

Standard Deviation (SD) 0.357 0.367 0.429 0.389 0.277

Maximum 4.667 4.833 4.833 5.0 4.630

Minimum 2.667 2.667 2.5 2.83 2.850

Number of data 200 200 200 200 200

Standard Error of Mean 0.025 0.026 0.030 0.028 0.020

Z – Value at 95% confidence 1.96 1.96 1.96 1.96 1.960

Lower Limit of Mean (3-1.96σx) 2.951 2.949 2.941 2.946 2.962

Upper Limit of Mean (3+1.96σx) 3.049 3.051 3.059 3.054 3.038

Decision Attribute HL HL HL HL HL

9


5.2 (b) Brand choice and dimensions of independent variable BE

It is notable that for Pears Baby, about 6.06% of customers have perceived the low level,

3.03% of customers are with moderate level, and rest 90.91% of customers have perceived

high level of attributes for all dimensions of BE. The results indicate that for other brand of

baby soaps, all customers have highly perceived level of attributes in relation to all

dimensions of BE (see Table 4).

Table 4: Brand Choice * Dimensions of Independent Variable BE – Cross Tabulation

Independent

Variable

Attribute

Levels

Brands

Pears

Baby (%)

Johnson &

Johnson (%)

Baby

Cheramy (%)

Khomba

Baby (%)

Brand Loyalty

(N = 200)

Low 2 (6.06) --- --- ---

Moderate 1 (3.03) --- --- ---

High 30 (90.9) 110 (100) 50 (100) 7 (100)

Brand Awareness (N = 200)

Low 2 (6.06) --- --- ---

Moderate 1 (3.03) --- --- ---

High 30 (90.9) 110 (100) 50 (100) 7 (100)

Brand Association (N = 200)

Low 2 (6.06) --- --- ---

Moderate 1 (3.03) --- --- ---

High 30 (90.9) 110 (100) 50 (100) 7 (100)

Perceived Quality

(N = 200)

Low 2 (6.06) --- --- ---

Moderate 1 (3.03) --- --- ---

High 30 (90.9) 110 (100) 50 (100) 7 (100)

Brand Equity High 33 110 50 7


5.3 Purchase Intension and its Dimensions

5.3 (a) Levels of purchase intension and its dimensions

The PI is assessed with four dimensions: objective of, recommendation for, convenience of,

and results and experience by, purchasing a branded baby soap as selectively combined from

EKB model of consumer decision-making process (see Figure 1). The dependent variable PI

has high level attribute of the customers (Mean X10 = 4.038 and see Table 5). Notably, most

of the customers expressed the common opinion regarding the variable of PI (standard

deviation = 0.397). With individual analysis, it is also noted that all customers have high level

attribute for the PI.

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Indicatively, all dimensions of PI, except recommendation, have high level attributes of

customers in relation to their mean values (mean values of objective X6 = 4.658,

recommendation X7 = 3.062, convenience X8 = 3.818, and results and experience X9 = 4.615).

Among these dimensions, objective of purchasing a branded baby soap has high value of

mean; and recommendation is with comparatively lower than other dimensions in

contribution to PI (see Table 5).

Table 5: Overall Measures of Dependent Variable PI and its Dimensions

Where HL = high level attribute, ML = moderate level attribute


In evaluating objective of purchasing, the health concern and the softness of skin are

considered as its indicators. Though their mean values (4.670 and 4.645, respectively) are of

high level attribute of the customers, health concern of the baby has marginally more

contribution than softness to objective of purchasing.

In recommendation for a branded baby soap as a dimension of PI, the recommendation from

doctors, friends and relations, and generation are considered as its indicators (mean value of

the indicators are 2.870, 3.340 and 2.975, respectively). Results indicate that the

recommendation from friends and relations has a high contribution to this dimension.

Description

Dimensions

Purchase

Intention

(X10)

Ob

ject

ive

(X

6)

Rec

om

men

da

tio

n

(X

7)

Co

nve

nie

nce

(X

8)

Res

ult

s &

Ex

per

ien

ce

(X9)

Mean 4.658 3.062 3.818 4.615 4.038

Standard Deviation (SD) 0.469 0.831 0.725 0.508 0.397

Maximum 5.0 5.0 5.0 5.0 4.792

Minimum 3.0 1.0 1.5 3.0 2.667

Number of data 200 200 200 200 200

Standard Error of Mean 0.033 0.059 0.051 0.036 0.028

Z – Value at 95% confidence 1.96 1.96 1.96 1.96 1.960

Lower Limit of Mean (3-1.96σx) 2.935 2.885 2.900 2.930 2.945

Upper Limit of Mean (3+1.96σx) 3.065 3.115 3.100 3.070 3.055

Decision Attribute HL ML HL HL HL

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Similarly, the convenience of purchasing a branded baby soap in PI has been assessed with

the indicators: soap sizes (based on its weight) and alternative brands (not another baby soap)

and their mean values are 3.725 and 3.910, respectively. The results indicate that alternative

brands have highly contributed to convenient purchasing.

The dimension ‘results and experience’ is assessed with only a single indicator as overall

satisfaction that has the mean value of 4.615 and this reflect a high level attributes of the

customers.

5.3 (b) Brand choice and dimensions of dependent variable PI

Notably, all branded soaps, except for Pears Baby, have high level attributes for all

dimensions. However, only for the dimension of ‘recommendation’ for Pears Baby, about

3.03% customers have reveal low level of attributes and for other dimensions, all customers

have revealed high level of attributes. Similarly, for all other branded baby soaps (Johnson &

Johnson, Baby Cheramy and Khomba Baby), all customers have reveal high level of

attributes in relation to all dimensions of PI (see Table 6).

Table 6: Brand Choice * Dimensions of Dependent Variable PI – Cross Tabulation

Dependent Variable

Attribute

Levels

Brands

Pears

Baby (%)

Johnson &

Johnson (%)

Baby

Cheramy (%)

Khomba

Baby (%)

Objective (N = 200)

Low --- --- --- ---

High 33 (100) 110 (100) 50 (100) 7 (100)

Recommendation

(N = 200)

Low 1 (3.03) --- --- ---

High 32 (96.97) 110 (100) 50 (100) 7 (100)

Convenience

(N = 200)

Low --- --- --- ---

High 33 (100) 110 (100) 50 (100) 7 (100)

Results & Experience

(N = 200)

Low --- --- --- ---

High 33 (100) 110 (100) 50 (100) 7 (100)

Purchase Intention High 33 110 50 7


5.4 The relationship between BE and PI

The correlation (bivariate) analysis is initially carried out to explore linear relationship of BE

with PI, if it exists. Results indicate that there is a statistically linear significant and positive

relationship (r = 0.569, p < 0.01) between BE and PI (see Table 7).

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Table 7: Correlation between Brand Equity and Purchase Intention

Pearson Correlation: r 0.569**

Sig. (2-tailed) 0.000

** = significant at the 0.01 level.


It is also noted that from a social science point of view, the BE has a reasonable strong

positive correlation. The association between the points of BE and PI is also very closely

observed and except a few combination of points, other points of coordinates between the

variables are very closely scattered (see Figure 4).

Figure 4: Scatter plots between Brand Equity and Purchase Intention


Further analysis carried out to confirm how each dimension of variables has association with

each of them and the variable. According to the correlation matrix, it is obvious that most of

the correlations between dimensions are significant at the 5% level (see Table 8). The

dimension of brand loyalty in BE has no relationship with the objective, recommendation, and

results and experience of PI. These might have diluted the strong linear relationship of BE

with PI. Similarly, perceived quality of BE has no significant relationship with

recommendation and convenience of PI. Notably, these are not consistent with the theoretical

specifications. However, it is noted that all dimensions of a variable have significant

relationship with other variable, even at the 1% level (i.e., significant relationships of PI with

all dimensions of BE, and significant relationships of BE with all dimensions of PI).

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Table 8: Correlation between the dimensions of BE and PI

Variables & Dimensions

Ob

ject

ive

Rec

om

men

dat

ion

Co

nv

enie

nce

Res

ult

s &

Ex

per

ien

ce

Pu

rch

ase

Inte

nti

on

Brand Loyalty Correlation .082 .126 .225** .085 .220**

Sig. (2-tailed) .251 .075 .001 .233 .002

Brand Awareness Correlation .190** .156* .285** .203** .333**

Sig. (2-tailed) .007 .027 .000 .004 .000

Brand Association Correlation .213** .316** .289** .188** .420**

Sig. (2-tailed) .002 .000 .000 .008 .000

Perceived Quality Correlation .408** -.015 .023 .386** .246**

Sig. (2-tailed) .000 .835 .748 .000 .000

Brand Equity Correlation .498** .208** .366** .459** .569**

Sig. (2-tailed) .000 .003 .000 .000 .000

* = significant at the 0.05 level; ** = significant at the 0.01 level.


In addition, the individual correlation analysis between the variables BE and PI for the brands

of this study reveal that except Khomba Baby, other three soaps (Pears Baby, Johnson &

Johnson, and Baby Cheramy) have significant correlation between BE and PI, even at the 1%

level (see Table 9). The insignificant relationship between the variable for Khomba Baby

might be due to small number (N = 7) and have diluted the overall significant relationship (r =

0.569, p < 0.01) between BE and PI.

Table 9: Correlation of Branded Baby Soaps

BR

AN

DE

D B

AB

Y S

OA

PS

Pears Baby

(N = 33)



Johnson & Johnson

(N = 110)



Baby Cheramy

(N = 50)



Khomba Baby

(N = 7)

Pearson Correlation: r 0.165


OVER VIEW

(N = 200)



** = significant at the 0.01 level


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5.5 Regression of Purchase Intension (PI) on Brand Equity (BE)

As the correlation analysis reveals statistically significant linear relationship between BE and

PI, the following regression model has been used to determine how does 1 unit of BE result in

PI.

PIi = 0 + 1 BEi + ui --- (1)

Where i = 1, 2, 3, …….., 200,

PI = purchase intention,

BE = brand equity,

0 = intercept (constant) value,

1 = coefficient estimate of BE and

ui = error term

Regression results indicate that 1 unit of consumer’s BE is significantly (p < 0.05) converted

as (1 =) 0.817 times into PI. The constant value (0 = 0.666, p > 0.05) implies insignificant

estimate and that PI can be estimated with 0 = 0.666 as an additional provision beyond BE in

predicting PI, when BE is zero. The utility of this model is confirmed with significant F-

statistic (< 0.001) and the model indicates that about (Adjusted R2) 32% variation of PI can be

explained by BE. Further, for explaining the rest of 68% variation of PI, the model needs to

accommodate additional suitable variables/factors (see Table 10). However, since this mode1

(equation 1) explores the possibility of utilizing BE’s individual role significantly (1 = 0.817,

p < 0.05), and its additional provision (0) seem insignificant (0 = 0.666, p > 0.05) and can

possibly be zero (0 = 0), we are motivated to explore the possibility of predicting the PI with

BE alone. Hence, we consider the following model for the same (equation 2).

PIi = 1 BEi + ui --- (2)

Where i = 1, 2, 3, …….., 200,

PI = purchase intention,

BE = brand equity,

1 = coefficient estimate of BE and

ui = error term

The results indicate that using BE alone (equation 2) without having the additional provision

(no intercept) can be useful, when compared to the model with intercept (equation 1). Results

of regression analysis indicate that 1 unit of consumer’s BE is significantly (p < 0.05)

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converted as (1 =) 0.978 times into PI and this model becomes useful to have BE alone for

explaining the PI. The utility of this model is confirmed with significant F-statistic (< 0.001)

and the model indicates that about (Adjusted R2) 99.3% variation of PI can be explained by

BE alone, without the additional provision (0). For explaining the rest of (less than) 1%

variation of PI, the model needs to accommodate additional suitable variables/factors and

however, it can be negligible (see Table 10).

Table 10: Results of Regression Analyses

Model 0 1 Adjusted R2 p – value of

F – statistic N

PIi = 0 + 1 BEi + ui 0.665713 0.817215** 0.320851 < 0.001 200

1.91998 9.747492

PIi = 1 BEi + ui ----- 0.977824** 0.993405 < 0.001 200

----- 173.5652

In the table, i = 1, 2, 3, …….., 200, PI = purchase intention, BE = brand equity, 0 = intercept

(constant) value, 1 = coefficient estimate of BE, ui = error term, and ** = significant at the 1% level. Each column of estimates for a model consists of two measures: upper is the coefficient estimate and

the lower is its t-statistic value.

Overall, the results of correlation analysis on the relationship between BE and PI has been

statistically confirmed even at the 1% level. The results are consistent with Aaker (1991) and

(1996)(b), Ashil and Sinha (2004) and Chang and Liu (2009). The results confirm that the

purchase intention is the outcome of the objective of purchase, recommendation, convenience,

and results and experience in using the product as indicated by Ariely, (2000), Chen and Xie

(2008), Schaffer (2000), and Holbrook and Hirschman (1982), respectively. Further, the

results of regression indicate that BE positively contribute to predict consumers’ PI and

hence, sellers of the baby soaps in Manmunai North Divisional Secretariat should be aware

about consumers’ level of BE to explore the PI of customers in the region.

6. CONCLUSION

This study considers BE as the independent variable and PI as the dependent variable. While

both the variables individually have high level attributes of the customers, the Pearson’s

correlation analysis explores a positively significant linear relationship between BE and PI.

The correlation coefficient (r) was 0.569 at the 1% level. This implies that the PI of a

customer for purchasing branded baby soap can be predicted with the customer’s nature of

BE. Hence, we accept the hypothesis H1: Brand equity has a positive relationship with

purchase intention.

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The correlation coefficient between the BE and PI indicates that the BE of a customer is

useful to explain 32% of variation in a customer’s PI. If a soap manufacturer comes to know

the customer’s status of BE, the manufacturer can predict 32% of the customer’s PI and the

regression model with intercept indicates that it needs additional suitable variables to predict

unexplained variation of 68% of the PI. However, the model without intercept indicates that

BE alone can predict the PI by explaining its more than 99% variation.

According to Ashil and Sinha (2004), and Chang and Liu (2009), Brand Equity can have

positive effect on Purchase Intention and this is consistent with Aaker (1991) and (1996)(b).

Our study also has the same positive effect of Brand Equity on Purchase Intention.

This study focuses only one independent variable BE to explain the PI and to explore the

relationship between them. However, it is explicit that there may be other variable(s) to be

considered to explain the variation of PI. Future studies can be devised to identify those

additional variable(s) for explaining the PI.

Further, we would like to suggest that future research should include some other factors such

as reference group, price, place, or promotion of the products and other variables such as

attitudes, motivation and perception in the study as in the EKB model. In addition, the other

four stages of decision making: problem recognition, information search, evaluation of

alternatives and after purchase decision can also be investigated for further understanding of

target customers’ decision making behavior.

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