The study of Consumer Buying Behaviour w.r.t Brand equity (Group-4).docx

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The study of

Consumer Buying Behavior

with respect to

Brand Equity

THE BUSINESS SCHOOL, UNIVERSITY OF JAMMU

Submitted by :

Ankita Kapoor(O6)

Manish Mahajan(20)

Shivani Gupta(46)

Tanvi Bhargav(53)

(GROUP - 4)



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Contents

S.no Particulars Page no.

1. Abstract- Keywords 3

2. Introduction 4

3. Objective of Research 5

4. Literature 6

5. Definition of Consumer

Behavior

6

6. Factors 7

7. Buying Decision Process 9

8. Importance of Branding 11

9. Brand Equity 13

10. Aaker's Model 15

11. Brand Awareness 16

12. Perceived Quality 18

13. Brand Association 21

14. Brand Loyalty 22

15. Summary 24

16. Conclusion 26

17. Bibliography 27



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ABSTRACT

Brand equity is a concept born in 1980s. It has aroused intense interest among

business strategists from a wide variety of industries as brand equity is closely

related with brand loyalty and brand extensions. Besides, successful brands

provide competitive advantages that are critical to the success of companies.

However, there is no common viewpoint emerged on the content and

measurement of brand equity. Brand equity has been examined from financial

and customer-based perspectives. This paper will only study the customer-based

brand equity which refers to the consumer response to a brand name. The aims

of the study are to review the dimensions of customer- based brand equity by

drawing together strands from various literature and empirical studies made

within the area of customer-based brand equity. A conceptual framework for

measuring customer based brand equity is developed to provide a more

integrative conceptualization of brand equity.

Keywords:

Consumer Behavior, brand equity, brand awareness, brand associations, brand

loyalty, perceived quality.



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Introduction

The background of research

The aim of marketing is to meet and satisfy target customers’ needs and

profitability .The starting point in marketing planning is always the consumer:

Who are the prospective buyers? How does our brand stack up against the

competition? What needs and motives enter into the buying decision? Peter

Drucker observed that a firm’s task is to “create customers’’ Kotler. Reicheld

further specifically indicated that companies could increase profits by 25% to 85%

just by achieving a 5% reduction in consumer defections. Meanwhile, one of the

most popular and potentially important marketing concepts to arise from the

1980s was the concept of brand equity. It has raised the importance of the brand

in marketing strategy. Aaker argues that customer-based brand equity is the

differential effect that brand has on consumer response to the marketing of that

brand. However, customer behaviour is not a simple concept; it does not only

encompass the buying decision process, but also cover the underlying influences

and other motives for purchasing products and services. Moreover, as the firms

and markets have grown in size, the competitive environment is becoming more

and more intense. Therefore, in a dynamic market, there are so many different

brands so that it becomes quite difficult for consumers to make the final buying

decision as well as for companies to gain customers.





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Literature

Introduction

It begins with the demonstrate of the definition of consumer behavior .Then it will

illustrate the different factors that influence the consumer behaviour as well as

the buying decision process in order to understand the essence of consumer

behaviour. After that, the emphasis will be on brand field. The effect of brand

equity on consumer behaviour will be discussed based on its four components in

order to analyze how brand equity is very important in the consumer decision-

making process.

The definition of Consumer Behaviour

There is no doubt that the customer is essential for the firm in the marketing

field. Wllkie stated that “consumer behaviour is the mental, emotional, and

physical activities that people engage in when selecting, purchasing, using, and

disposing of products and services so as to satisfy needs and desires”. He further

explained that there are seven keys to consumer behavior , which are 1)

consumer behaviour is motivated; 2) consumer behaviour includes many

activities; 3) consumer behaviour is a process; 4) consumer behaviour varies in

timing and complexity; 5) consumer behaviour involves different roles; 6)

consumer behaviour is influenced by external factors; 7) consumer behaviour

differs for different people. Moreover, Blackwell, Miniard, and Engel defines

“consumer behaviour as those acts of individuals directly involved in obtaining

and using economic goods and services including the decision processes that

precede and determine these acts”. That is to say, consumers behaviour involve

with the mental procedure and physical acts towards the multiply goods and

services.



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The Major Influence Factors on Consumer Behaviour.

According to Kotler’s , consumer purchases are influenced strongly by

cultural, social, personal and psychological characteristics. Generally speaking,

marketers cannot control such factors, but they must take them into accountbecause these factors affect how individual consumers react to the different

reactions that firms send out through their communication. The marketer’s task is

to understand what happens in the buyer’s consciousness and the buyer’s

decision making process. Thereby, this section will focus on demonstrating the

factors affecting buying behaviour .

Cultural Factors

Cultural factors exert deep influence on consumer behaviour. Culture is the basis

for a person’s wants and behaviour ..Culture refers to “a set of values, ideas, Arte

facts and other meaning symbols that help individuals communicate, interpret

and evaluate as members of society” . It affects the consumers shaping the

attitudes, feelings, biases, and opinions, which enable marketers to interpret or

even predict the reaction of consumers to specific marketing strategies. Thus, it is

vital for firms to be aware of culture, even its trends and changes. and gives rise

to new marketing opportunities and threats.

Social Factors

A consumer’s behaviour is also influenced by social factors, such as reference

group, family, and social roles and status .Because these social factors can

strongly affect consumer response, firms must take them into account when

designing their marketing strategies.

For one thing, reference group has significant influences on the individual ’sproduct and brand purchases. “Reference group are groups that serve as direct or

indirect points of comparison or reference in forming a person’s attitudes or

behaviour” Indirect or direct reference groups include family, friends and

neighbours.



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Bearden and Rose pointed out that reference group not only lead an individual to

new behaviors but also have effect on individual’s attitude and self concept,

which in turn influence actual brand preference and choice. Therefore,

references lead the market trends .

Personal Factors

A buyer’s decision is also influenced by personal characteristics such as the

buyer’s age, occupation, economic situation, lifestyle and personality and self-

concept.The age of the buyer is one of the major factors influencing individual ’s

purchases..People in the different ages have different needs. A brand must be

understandable to the age group to which the product or service is targeted and

should be delivered through a medium used by members of that group .On the

other hand, a person’s occupation can affect the goods and services bought.

Occupational groups usually have above average interest in the products and

services, which are related to their occupation. Therefore, the marketers need to

consider the right occupational groups as the production and marketing target. A

company can even specialise in making products needed by a given occupational

group.



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The Buying Decision Process

As introduced above, the consumer’s choice results from the complex interplay ofcultural, social, personal and psychological factors. Although the marketer cannot

influence many of these factors, they still can be useful in identifying interested

buyers and in shaping products and appeals to serve their needs better.

Therefore, it is

necessary to introduce consumer buying decision process, by which marketers

can monitor the process to develop the effective marketing mix by utilizing stimuli

and factors to guide consumers to certain products. In a buying decision process,

a consumer will pass through five stages as shown below.

Figure: Buyer decision process

Source: Adapted from Kotler.





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Importance of Branding

As stated before, consumer buying behaviour is influenced by many factors, such

as marketing stimuli and environment stimuli. However, this study will more

specifically focus on branding that is I am most interested in as marketing

function, which is related to how brand equity can influence the consumer

behaviour in laptop purchasing. Thus, this section will examine the importance of

branding since consumers view a brand as an important part of a product, and

branding can add value to a product which will influence their buying behaviour

..A successful brand is one which creates and sustains a strong, positive and

lasting impression in the mind of a buyer)\. As Doyle claims “a successful brand is

a name, symbol, design or some combination, which identifies the product of a

particular organization as having a sustainable differential advantage”. That is to

say a successful brand is a substantial asset to the companies. Emperical report

shows that Microsoft estimate value is $57 billion and that of IBM is $44 billion

and estimate the brand value of Coca-Cola is $84 billion, .There is no doubt that

those companies are benefited from its branding strategies. In fact, branding is

defined as the enterprise of creating added value in the minds of consumers,

which is to build perceived values beyond the observable physical value of the

product, and thus differentiating the product in a highly competitive environment..The aim of branding is to help customers to identify products that are relevant

for them, and so take much of the anxiety out of decision making .As the business

environment is teemed with competition and more sophisticated customers,

superior products with only physical attributes is not enough to maintain and

attract consumers. Thus, firms must build effective branding strategies to help

consumers organize their knowledge about certain products and service, and

convince the customers what are firm’s meaningful advantages among the

different brands. As Hankinson and Cowking argued to build up a strong brand isone of the ways in which a company can develop and sustain advantage over its

competitors, and thereby maintain or increase its sales or market share. In other

words, the stronger the consumer identification of the brand, the stronger the

relationship firms have with consumers and therefore the brand effect on

purchase. In fact, branding can be seen as a process of building and developing



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corresponding\ marketing strategies based on firms’ resource and capability

aiming to communicate certain brand to targets effectively an consistently

thereby influencing the consumer behaviour (Jones, 1986). Thus, in a competitive

market environment, firms need to strengthen the relationship between the

consumer and the brand as that reflects the fit between the consumer’s own

physical and psychological needs and the brand’s functional attributes and

symbolic values as perceived by the consumer. Hence, firms need to create

customer-based brand equity (a topic explored in the next section) by branding to

obtain the competitive advantages. Consequently, a high degree of brand equity

among the consumers is an important goal of marketing strategy. Thus, it is

necessary to discuss how brand equity affects consumers buying behaviour.



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Brand Equity

Brand equity has been the most important topic in the marketing field over last

20 years. It has been viewed as a large number of perspectives .In a general sense,

most marketing scholars agree that brand equity is defined in terms of the

positive outcomes resulted from past marketing investment uniquely attributable

to the brand . From Farquhar’s points of view the brand equity is “the added

value to the firm, the trade, or the consumer with which a given brand endows a

product”. He further stress out adopt a financial perspective that brand equity

can result in incremental cash flow associating a brand name for a product. That is

to say, brand equity can benefit the firm in profitability.

The similar statement also presented by Brodsky defined “brand equity is the

sales and profit impact enjoyed as a result of prior years ’ marketing efforts versus

a comparable new brand”. From customer based view, Keller defined brand

equity as the effect of the marketing of the brand on the consumers ’ reaction,

which in turn differentiate brand themselves. He also defined brand knowledge in

terms of two core components, brand awareness and brand image.

In other words, brand equity is the unique image for the certain brand in mind of

the consumers, and such image can trigger different responses from the

consumers. To put in the same way, Aaker defined “brand equity as a set of assets

and liabilities related to a brand’s name or symbol that add to the value provided

by a product or service to a firm and/or to that firm’s customers”. He also

proposes a model for the consumer-based brand equity, which categorizes four

components for the brand equity including brand awareness, perceived quality,

brand association and brand loyalty.

Kotler and Keller further argued that brand equity is an important intangible asset

that has psychological and financial value to the firm and has effect on

consumer’s response to the certain brand’s product purchase.



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Effects of promotional activities on Brand Equity

Brand equity is seen as the outcome of long term marketing efforts operated to

build a sustainable , differential advantage relative to competitors . Yoo

suggests, any marketing actions will affect on customers‟ brand knowledge e.g.,

psychological perception, which is result in a positive or negative impact on brand

equity.

Moreover, According to Keller “a brand is said to have a positive (negative)

customer-based brand equity if consumers react more or less favorably to the

product, price, promotion, or distribution of the brand than they do to same

marketing mix element when it is attributed to a fictitiously names or unnamedversion of the product or service‟

Thus, this study will select the following 6 promotional activities which can affect

on the perceptions of consumers as well as brand equity; they are advertising,

world of mouth, celebrity endorsement, sales promotion, store image, and event

sponsorship. These selected activities are represented as the most popular

marketing activities that marketers apply frequently in China when marketing

products and services.



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Aaker ’ s model

According to Aaker ,, it includes four categories, which are brand awareness,

,perceived quality, and brand identity, ,brand loyalty ..

The higher a brand has brand equity, the higher they have brand awareness,

perceived quality, strong brand associations and brand loyalty .In this research

study, it will utilize the four components of brand equity to investigate the effect

of brand equity on consumer buying behaviour.



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Brand Awareness

According to Aaker , brand awareness is “the ability of a potential buyer

to recognize or recall that a brand is a member of a certain product category ”.

That is to say, brand awareness is the capability of knowledge and identification

of certain brand retrieved under some situations. Aaker further points out that

Awareness is measured according to the different ways in which consumers

remember a brand,

ranging from recognition to recall to ‘top of mind’ to dominant ( Aaker, 2002). As

Chernatony and McDonald said “ brand recognition refers to the consumer’s

ability to recall previous exposure or experience with the brand, brand recall

refers to the consumer’s ability to retrieve the brand from memory when giventhe product category as a cuee”. ..In the agreement, Baker states that brand

awareness refers to the strength of presence of a brand in the consumers mind

and the extent to which they are able to recognize or recall a brand name. In

other words, the brand awareness is how much consumer’s familiar with the

brand.

Brand awareness effect on consumer behaviour

According to Aaker , brand awareness has significant impact on the consumer

buying behaviour. Firstly, a high level of awareness of a brand that consumers

have, the high level the brand will be considered when they choose to buy .It is

because in relation to the consumer buying process, brand awareness plays an

important role when have intention to buy something for needs.

Pitta and Katsanis point out that in the classic consumer behaviour model,

consumers who recognize a problem needed to be served always engage in

routine product choice when they have high level of that product category ’s

brand awareness; in more specific it is related to the brand recall, or at least

considering that brand as alternative product choice.



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That is to say, on the one hand, consumers always are passive recipient of

product information and are reluctant to spend much time and effort for choosing

brand . Therefore, the brand awareness will lead them to choose most familiar

brand that they have knowledge of; on the other hand, in fact, in the consumer

decision making process, consumers always have many alternatives to be

considered. Because recall determines which alternatives are generated, those

not recalled cannot be part of the consideration set of products, thus, the recalled

brand will have the advantage to be the opportunity last choice.

Thus, brand awareness is crucial to getting into this consideration set as the brand

lacks of the awareness may not has the opportunity to be considered for buying.

For example, if a consumer wants to buy a laptop, the first brands that come up

to the consumer’s mind will have an advantage, which will be considered to buy.The same point is also presented by Kotler and Keller that is a high level of brand

awareness might affect consumer choices among brands in the consideration set

and the product category, even if there are no other associations linked to those

brands. That is to say, brand awareness is sufficient to result in more favorable

consumer response, for example, consumers are more likely to base their choices

merely on familiar brands.

Second, brand awareness provides a brand with a sense of familiarity, which isbrand recognition and people like the familiar .In other words, the consumers will

be stimulated by the familiarity of such brand when they want to purchase

something. Moreover, brand awareness can serve to brand extension . That is to

say when firm develop sub-brand for products, the more awareness of host-brand

will lead to the acceptance of this sub-brand. This will result in the increase of the

sales. Diet Coke is a good example, which sales benefits from the Coke brand.

Therefore, the more the consumer is aware of the product, the greater the

possibility that the consumer will purchase the product.



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Perceived Quality

Perceived quality can be defined as “the customer’s perception of the overall

quality or superiority of a product or service with respect to its intended purpose,

relative to alternatives”.

It is a higher-level abstraction rather than a specific attribute of a product. Various

attributes and relevant benefits create a perception of quality in consumer’s

mind. In other words, perceived quality is the consumer’s judgement about a

product’s overall excellence or superiority. It is a significant factor in building

brand equity

Perceived quality effect on consumer behaviour

According to Aaker ,first of all, a brand’s perceived quality provides the value for

consumers to buy such brand’s products. It is because consumers always make

buying decisions rely on the feeling of the basic characteristics of the product to

which the brand is attached such as the reliability of the product since they

always cannot experience the product before they buy it.

Namely, perceived quality is related to the consumer purchasing decision makingprocess. In other words, consumer always prefer to donate less time and effort

for gaining the information which can assess the products’ quality, as a result, the

observation of the certain brand might be a determination of the final decision

making .

Occasionally, consumers may not be able to possess the access or not be able to

judge the information about the product’s quality. Thus, perceived quality

becomes the important factor affecting the final brand choice. On the other hand,

through the buying decision making process, the perceived quality can contribute

to the evaluation stage .The consideration sets of the brands will be narrow down

when the above conditions occurs. In the agreement, Sethuraman and Cole assert

that perceived quality is central to the theory that a strong perceived quality adds

value to consumers’ purchase evaluations and willing to pay for a brand.



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Secondly, a perceived quality may result in a willingness of consumer for buying a

brand for a price premium. That is to say, if a brand’s perceived quality is good in

mind of customers, then the customer may be more willing to buy such brand

even the brand’s price is higher then others. Therefore, it will create a premium

profits for the firm compared to other firms, which can indeed provide resources

with which to reinvest in the brand, such as R&D activities, brand enhancing

activities. As Sethuraman and Cole state that perceived quality explains a

considerable portion of the variance in the price premium consumers are willing

to pay for well known brands.

Moreover, perceived quality can also be meaningful to retailers, distributors, and

other channel members .Obviously, the channel members are motivated to carrybrands that are well-regarded, which customers want. Therefore, well perceived

quality will gain greater trade cooperation and support and in turn adds the

customer base.

In addition, perceived quality can be exploited by introducing brand extensions,

using the brand name to enter new product categories .In other words, well

brand with respect to perceived quality will have higher success probability than a

weaker brand in terms of brand extension as the consumer would appreciate thatbrand’s product, which in turn elicits more purchasing behaviour

Briefly, perceived quality is usually at the heart of what consumers are buying,

enhanced perceived quality adds a convincible reason for consumers to make

final purchase decision



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Brand Association

Aaker claims that “brand association is the category of a brand’s implications

which include anything ‘linked’ in memory to a brand”. Keller defines brand

associations as informational nodes linked to the brand in consumer’s mind,

which will transfer the meaning to consumer for that brand. Aaker further argues

that a set of brand associations compose the brand image, which is organized in

some meaningful way.

Moreover, Keller states that brand association can be classified into three major

scopes including attributes, benefits, and attitudes. According to Keller ,

attributes refer to descriptive characteristics that consumers think of in the mind

towards certain brand’s product, which is formed by product-related attributes,

non product- related attributes, feeling and experiences, and brand personality;

benefits is related how consumers value the offer of a brand ’s products, namely,

it is the perception of consumers about what the products can do for them;

attitudes are defined as the overall evaluation of a brand, which is most

important in consumer’s brand choice decision making.

Lamb Jr and Low further argues that brand association can be measured by the

brand image, brand attitude and perceived quality.

The brand image is defined by the Dobni and Zinkhan is the reasoned or

emotional perceptions consumers attach to specific brands. In line with the Dohni

and Zinkhan, Keller suggest that “brand image is the perceptions about a brand

as reflected by the brand associations held in consumer memory”.

Brand association effect on consumer behaviour

According to Aaker, brand association can help customer process information. In

the reality, consumers may not have process and access to perceive or obtain

some facts about the brands, and to communicate such things may high cost for

the companies.



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Therefore, the brand with high level of association will contribute to facilitate

consumer for gaining the meaning of the brand. For example, the Volvo brand

always is associated with safety, however, such meanings is difficult for customers

to perceive before they have experience. Therefore, Volvo is benefited from such

brand association for retrieving the information in mind of consumers.

However, it depends on the past marketing investment towards that brand. On

the other hand, brand association can help consumers retrieve the information

about certain brand .

That is to say, if a brand associates with something, the consumer will easily

reflect such things in the mind when they confront the brand in some situations.

Brand association also involve product attributes or customer benefits that

provide a specific reason to buy and use the brand . They also represent a basis

for purchase decisions and brand loyalty. For example, Colgate provides clean,

white teeth. Some associations influence purchase decisions by providing

credibility and confidence in the brand. That is to say, customers regard the brand

association to some extent as references, which making them feel more

comfortable for purchasing that brand. As Kolter further argued that the brand

associations convey not only the concept but also the meaning of the product in

terms of how it fulfils a customer’s needs.





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As Raj said the more loyal customers the firms have, the more stable the brand’s

market share and the less vulnerable it will be to competitive. Moreover, brand

loyalty can help firms attracting new customers. Keller states that a customer

base with segments that are satisfied and others that like the brand can provide

assurance to a prospective customer, especially when the purchase is somewhat

risky. It is because the acceptance of the brand by a group of existing customers

can be an effective message through world of mouth effect. It can also create

brand awareness from the customer base, which in turn path a way for attracting

new customers .

Finally, brand loyalty provides a firm with time to respond to competitive moves

(Aaker,1991). For example, if a competitor develops a superior product, a loyal

following will allow the firm time needed for the product improvements to bematched or neutralized as loyal, satisfied customers will not be looking for new

products, and thus may not learn of advancement.

Briefly, brand loyalty will result in consumers continue to buy the brand in the

future, recommend it to friends, and choose the products over others, even those

with better features or lower price.



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Summary

Brand equity is one of the significant concepts in brand management, as well as in

business practice and academic research. Developing and properly managing

brand equity has been emphasized as an important issue for most firms. Brand

equity can be classified into three main perspectives i.e., customers-based

perspective, financial perspective and combined perspective.

Moreover, brand equity is considered as multidimensional concept and a complex

phenomenon. According to Aaker that, brand equity consist of five dimensions:

brand loyalty, brand awareness, brand association, perceived quality and other

brand propriety assets. Brand awareness is defined as “the ability of a buyer to

recognize or re call that brand is a member of certain product category”, and it is

considered as the first and fundamental attribute of customer brand equity.

Beside, Brand association is described as “anything linked in memory to a brand”

and brand image is as seen as “a set of associations, usually related in some

meaningful way”, it is the outcome of high brand awareness, is positively relate

to brand equity.

Subsequently, perceived quality is not the real quality of product, but the

consumer subjective assessment of that product; it is “the core construct” in thestudy to measuring brand equity. However, brand loyalty is different from other

brand equity dimensions, because it is associated with usage experience, as well

as it results in three given brand equity dimensions-i.e. brand awareness, brand

association and perceived quality.

Brand loyalty is a concept that firms emphasize, since it may create or sustain a

customers' patronage over the long-term, thereby increase brand equity. Brand

equity is seen as the outcome of long term marketing efforts operated to build a

sustainable, differential advantage relative to competitors, any marketing actions

will affect on customers‟ brand knowledge. Advertising is the most popular

marketing activities, it can create long-term brand image for a product (service)

or trigger quick sales, as well as it may positive effects on all elements of the

brand knowledge.





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Conclusion

Strong brand equity allows the companies to retain customers better, provide

service much effectively, and increase marginal profits. Brand equity can be

increased by successfully implementing and managing an on going marketing

effort by offering more value to the customer, and listening to their needs. Brand

equity factors influencing customer purchase decision criterion has been

discussed. The study concluded that brand managers efforts should be focused

on customer loyalty, trustworthiness, , brand distinctions and innovative features

in managing brand equity, appropriate marketing mix should be focused to

exploit brand equity in terms of the purchase decisions and repetitive sales of the

products. It can be concluded that it's not only the marketer’ name which create

a brand image in the mind of customer but dealer name can also influence also

develop the brand image attributes.



Bibliology

1. http://en.wikipedia.org/wiki/Consumer_behaviour

2. http://en.wikipedia.org/wiki/Brand_equity

3. http://en.wikipedia.org/wiki/Brand_loyalty

4. http://en.wikipedia.org/wiki/Aaker_model

5. http://www.studymarketing.org/articles/Brand_Management

6. http://www.managementstudyguide.com/brand-

associstion.html

7. http://www.researchersworld.com/vol2/PAPER_04.pdf

BOOKS REFERED:

Marketing Management

13th Edition

By Philip Kotler

Kevin Lane Keller

Abraham Koshy

Mithileshwar Jha

http://en.wikipedia.org/wiki/Consumer_behaviour


http://en.wikipedia.org/wiki/Brand_equity


http://en.wikipedia.org/wiki/Brand_loyalty


http://en.wikipedia.org/wiki/Aaker_model


http://www.studymarketing.org/articles/Brand_Management


http://www.managementstudyguide.com/brand-%20%20%20%20%20%20%20%20%20associstion.html










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The study of Consumer Buying Behaviour w.r.t Brand equity (Group-4).docx