Demographic factors influence on the brand performance of the manufacturing firms

ISSN 2348 – 0319 International Journal of Innovative and Applied Research (2014), Volume 2, Issue (6): 126- 133

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Journal home page: http://www.journalijiar.com INTERNATIONAL JOURNAL OF INNOVATIVE AND APPLIED RESEARCH

RESEARCH ARTICLE

Demographic Factors Influence on the Brand Performance of the Manufacturing Firms

Puteri FadzlineTamyez, Norzanah Mat Nor, Syed Jamal AbdulNasir Syed Mohamad

Arshad Ayub Graduate Business School, UniversitiTeknologi MARA, Shah Alam, 40450, Malaysia.

……………………………………………………………………………………………………… Abstract:

The purpose of this paper is assess the level of brand performance among the furniture manufacturing firms in

Malaysia where the background of firms were examined in determining the influence of demographics on their

brand performance. The brand performance framework by Wong and Merrilees (2008) was adapted to measure the

brand performance of the furniture manufacturing firms in Malaysia. 550 questionnaires were sent out to CEOs or

the marketing team of the furniture firms. This study found that there is a high level of functional innovation,

followed by meaning and aesthetic innovation. However, typological innovation mean score is slightly below the

theoretical average. Ultimately, furniture manufacturing firms have fairly high brand performance, brand

distinctiveness and brand barriers, but fairly low brand orientation, which can be considered positive results. Large

furniture firms are reported to have better brand performance than small and medium furniture firms. The findings

discussed are parallel to the emerging importance of increasing brand performance among furniture manufacturing

firms in Malaysia.

Key Words:Furniture manufacturing firms, Brand performance, Brand orientation, Brand distinctiveness, Brand barriers, Design innovation,

Aesthetic innovation, Meaning innovation, Typological innovation, Functional innovation. ……………………………………………………………………………………………………

Introduction The furniture industry in Malaysia is under a manufacturing sector of the small, medium enterprises (SMEs)

(Ratnasingam & Associates, 2002). The Malaysian furniture is considered as high valued products, constituting of

74 percent of the exports from Peninsular Malaysia (Nee, 2013). A competitive production structure of 3776 mills

has produced US$7-8 billion in 2009. Surveys conducted by Roda, Zakaria, Hin Fui, Ismariah, & Abd Rahman,

(2011) found that on average one Malaysian mill has created USD 1.8-2 million of wood products exports. This is

similar to other countries such as Germany, Italy and Denmark where their productions are structured by SMEs.

Furthermore, cheap foreign labour constrains Malaysian furniture manufacturers to act as trendsetters and thus

prefer to survive against price (Council, 2013; Kam&Heng, 2010). This aligns with Singh & Tromp (2011)’s

findings that manufacturers have been focusing on increasing sales numbers with minimum emphasis on design or

re-design. Regardless of the latter, currently customers’ concern are more on not only on price and quality, but also

pride of ownership, environmental elements and many more (Ratnasingam & Ioras, 2003). The lack of focus on

branding and marketing activities among furniture manufacturers was also clarified by Council (2012) due to their

limited amount of knowledge and awareness of the importance of branding. Specifically, resources to undertake

their branding activities are of low capacity which inhibits their endeavor towards achieving a successful brand

(Nor, Tamyez, & Nasir, 2012). Therefore, such a phenomenon has created a concern of whether the current

manufacturers have been equipped with the right innovation, branding and originality to reach world-class

producers. In this respect, brand performance is one of the main interest among numerous researchers in the area of

management (Ambler, 2003; de Chernatony, L., Harris, F. & Christodoulides, 2004; Farris, Bendle, Pfeifer, &

Reibstein, 2008; Kim, H.-B., G., & An, 2003; Rubinson, J. & Pfeiffer, 2005; Schultz, 2005). Numerous authors have

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

(Aaker, 1991; Ambler, 2003; Arjun 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). However, limited studies of brand

performance are related with design innovation and only linked to innovation in general. Wong &Merrilees (2008)’s

research is closely linked innovation with brand orientation, brand distinctiveness and brand performance.

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RESEARCH QUESTIONS

1. To examine the most adopted design innovation strategy and brand strategy in their brand performance

among the furniture manufacturing firms in Malaysia

2. To identify the brand performance among company sizes within the furniture firms

METHODOLOGY

The data were collected from small, medium and large sized furniture firms operating throughout Malaysia. The

segregation of the manufacturing furniture firms are based on their sales revenue in year 2010. The sampling

measurement applied is by Krejcie & Morgan (1970). However, samples included accumulated are 910 firms. The

total of sample size is (S= 269). This research chose a 3 percent random sample of the population consistent with

recommendations for determining size of random sample (Krejcie & Morgan, 1970). The total number of

respondents for small-sized are (168 respondents), medium-sized (72 respondents) and large-sized (29 respondents).

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 (Martin Roll, 2006). The questionnaire

closely followed previous instruments used in brand strategy studies (Wong and Merrilees 2005; Wong and

Merrilees 2007; Wong and Merrilees 2008) and design innovation pyramid (Rampino 2011). The English version of

the survey was forward translated, back translated and decentered into Chinese and Bahasa Malaysia to establish

translation accuracy. Chinese version was established in the survey to increase the number of responses among the

samples. The targeted population is among Chinese and Bumiputera manufacturers. The Malaysian furniture

industry includes a high density of Chinese speakers (Harkness and Schoua-Glusberg 1998). In addition, a large

percentage of manufacturers do not obtain the appropriate educational background to do their jobs, except for only 9

and 7 percent of manufacturing workers agreed that their education best suited for their job they now possess.

However, experience or technical skills are the most important factors for hiring employees in the manufacturing

sector (Unit 2010). Therefore, translation on questionnaire is needed to ease and overcome the barrier of lack of

English language proficiency among marketing teams and executives, and even the top management (Kim and Han

2004).

RESULTS

Demographic profile of respondents

The respondents comprised mainly of female, 42 respondents (20.59 percent) and 162 males (79.41 percent). The

biggest single group of respondents in the ethnicity distribution (97.06 percent) was Chinese, and followed by Malay

(2.94 percent). This finding is consistent with Board (2010b) on the dwindling numbers of bumiputera furniture

manufacturers in Malaysia. Thus, we can conclude the translated version of Mandarin language has eased their

ability to comprehend with the structure of the questionnaire. Most of the respondents (30.39 percent) fell in the 40-

49 age groups and more than 35 percent of the respondents are among owners and managers. The majority of the

respondents have experience in the industry for more than 20 years. Additionally, the majority of respondents are

working in private limited firms of more than 20 years operation.

A significant percentage of furniture firms i.e. 90.2 percent, operating for more than 20 years; indicating that

furniture firms may be reluctant to exit or graduate to become large firms. Only 1 percent of the furniture firms are

among 6 to 10 years. In terms of size, the majority of respondents of 39.22 percent are small-sized enterprises with a

number of 1-100 workers. This is consistent with the total of furniture firms in Malaysia where the small-sized firms

(49.26 percent) are dominant in comparison to medium-sized (21.04 percent) and large firms (8.43 percent) (Corp,

2012). The majority of their businesses is export-oriented and operates in one plant only. Thus, we can conclude that

the respondents are sufficiently well versed with the operations of the company and able to comprehend the needs of

the questionnaire. It is imperative to comprehend the structural characteristics of SMEs excluding microenterprises

and large firms of the furniture industry in relation with the research model in this study. Table 1 presents the

descriptive statistics for the variables used in this study. It describes functional innovation, meaning innovation and

aesthetic innovation mean score of furniture manufacturing firms which are fairly positive about these innovations.

Table 2 illustrates the Mean Values and Reliability of Variables involved.

The summary of the descriptive analysis and reliability results are presented in Table 2. The composite reliability

(i.e., the total amount of true score variance in relation to the total scale score variance) denotes the amount of the

scale score variance that is accounted for by all the underlying factors. The composite reliability are all above the


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0.70 threshold as suggested by Hair, Jr., et al.(1998). An ANOVA test was carried out to compare if there were

differences in brand performance in terms of company size, as depicted in Table 3:

The results of one way ANOVA reveal there is a significant relationship between size of company and brand

performance (DF 2,196=12.541, p<0.05). Table 4 presents the difference of effects of company size towards brand

performance.

By looking at the Games Howell test, it shows that there is significant mean difference between size company (1-

100) and 250 and more (mean diff=-1.01, p<0.05). This additional analysis shows that big companies (250 and

more) (3.95±0.63) are more focused on brand performance as compared to small companies (2.94±1.09).

DISCUSSION

In this study a model is developed and empirically tested of how brand strategy process and design innovation

contributes to brand performance in SMEs and large firms. They reported a higher level of functional innovation,

followed by meaning and aesthetic innovation. Hence, in general furniture manufacturing firms indicated that

functional, meaning and aesthetic innovation is important, and that they understand the purpose of these innovations.

Typological innovation mean score is slightly below the theoretical average (Mean 2.95, S.D. 1.39), indicating that

furniture manufacturing firms experience an average amount of this innovation and consider too radical for the

furniture firms. Next, the average scores on the branding strategy dimensions are 3.15 (S.D. = 1.36) for brand

barriers, 2.88 (S.D. = 1.43) for brand orientation, and 2.93 (S.D = 1.34) for brand distinctiveness. Additionally,

brand performance has a mean score of 3.05 (S.D = 1.48). Ultimately, furniture manufacturing firms have fairly high

brand performance, brand distinctiveness and brand barriers, but fairly low brand orientation, which can be

considered positive results.

The ANOVA result shows that large firms have better brand performance than small-sized furniture firms. There is

extensive literature concerned with the differences of effect of company size towards brand performance. A prior

study by Pavitt (1990) has noted the advantages of large firms for their accumulated competences and have more

formal, planned and a well-structured marketing approach. Identically, owning a superior value, intangible or

tangible elements are perceived as having a successful brand (Roy & Banerjee, 2012). In his study, Krake (2005)

discovers that it further benefits on the increased of market share, and a huge level of customers. Correspondingly,

premium prices can be obtained through a strong brand which produce a high potential to generate future cash flow

(Holt, 2002; Shocker, Srivastava, & Ruekert, 1994).

In the furniture industry itself, the furniture SMEs created a high dominance to 95 percent of the total industry

unlike large furniture companies which only covers 5 percent of the total industry. Correspondingly, Ahmad in 2009

revealed from their case studies that SMEs are still struggling in branding in the global arena even though there are

commercial establishments in SME category in the 9th

Malaysia Plan. Supplementary to this, this study confirms that

SMEs are associated with their lack of size, limited resources and multiple competitors (Ottesen & Grønhaug, 2007).

This notion is similar to Carvalho (2007)’s view where barriers such as low capital requirements will hinder the

progress of their brand performance. SMEs perform a laid-back, restrained brand environment that describes

minimal brand orientation and dependent on the “one size fits all” approach which leads to a less successful brand

performance (Parrot, Roomi, & Holliman, 2010). Hirvonen & Laukkanen (2009) claimed that SMEs belittle the

importance of brand performance in their firms by postponing their investment in orientating their brand and rather

struggle in their daily survival. Ahmad (2009)reported the high failure of SMEs of 80 to 95 percent of their products

fail to become sustainable brands.

Small firms tend to spend relatively less than large firms in their branding activities even though their brand vision

and orientation specifically suits a certain furniture firm. Not only the furniture industry is a labour-intensive

business, it is also a low-entry barrier with fully automated processes that is hard to be replicated (Abonyi, 2006;

Organization, 2005; Robb & Xie, 2003). Competition among SMEs of the furniture industry is mainly based on

costs, and changes comes from improvements and modifications in production methods (Chaminade & Vang, 2006).

Apart from that, its competitiveness are enhanced by its subcontracting where their specialization are on producing

certain parts of furniture and processes (Ng & K., 2011b).

In a different perspective, SMEs have a few advantages in branding which are quick in making decisions and more

flexibility in comparison to large firms (Krake, 2005).Abimbole & Vallaster (2007) agrees to Krake (2005) and

added that SMEs are more suited in holistic brand management as compared to large firms. additionally, small-sized

companies are very suited in applying design innovation as it requires economies of scale rather than competing on

price Candi (2006), as opposed to functional innovation that requires a long-term investment (Council, 2012b; Tan,

2000).


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CONCLUSION

The Malaysian Furniture Promotion Council (MFPC) however continues to develop working relationships with

strategic marketing partners from abroad to reposition the industry away from existing price segments. Apart from

launching the Furniture Excellence Programme or Furnexpo, MFPC has also appointed technical consultants to be

based in Malaysia in order to ensure that Malaysian products conform to the high-expectant and strict requirements

of the market-standards (Brandt & Wei, 2012). Scholars from design thinking and radical design driven innovation

also agreed to this notion (Dell'Era et al., 2008).

It has low risk, less expensive, less time-consuming and gives more advantage to the end-user’s perception (Mutlu &

Er, 2003; Oakley, 1990; Porter, 1980; Walsh, Roy, & Bruce, 1988). In addition, innovative products must not only

be produced by new technology and materials but also by instilling the consideration of the customers wants and

needs (Jerrard et al., 1998). Currently, design and non-technological innovation drivers as well as branding through

brand distinctiveness and brand orientation have become more relevant as it is less capital intensive and have shorter

pay-back periods in comparison to technological research (Arquilla & Genco, 2008; Communities, 2009; Kumar,

2009).

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Table 1 depicts the demographic of the sample (n= 204):

TABLE 1: Demographic of the sample (n=204)

Demographic Frequency (%)

Gender

Male 162 79.4

Female 42 20.59

Race

Chinese 198 97.06

Malay 6 2.94

Age

20-29 34 16.67

30-39 50 24.51

40-49 62 30.39

>50 58 28.43

Position in company

Owner and CEO 49 24.02

Owner and Manager 73 35.78

Manager but not Owner 82 40.20

Experience in the industry

<10 12 5.88

10-20 42 20.59

21-30 87 42.65

31-40 63 30.88

Legal form of business

Sole Proprietor 2 0.98

Private Limited 196 96.88

Partnership 6 2.94

Age of Company

6-10 2 0.98

11-15 6 2.94

16-20 12 5.88

>20 184 90.20

Company size

1-100 80 39.22

101-250 70 34.31

250 and more 54 26.47

Export Intensity

1-50% 97 47.55

Heavy (>50%) 107 52.45

Business operates

More than one plant 83 40.69

One plant only 121 59.31


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Table 2: The Mean Values and Reliability of Variables

Variable Mean Standard Deviation Variance Number of items Composite reliability

Brand Barriers 3.15 1.36 1.86 6 0.82

Brand Orientation 2.88 1.43 2.03 6 0.91

Brand Distinctiveness 2.93 1.34 1.80 7 0.95

Aesthetic Innovation 3.02 1.33 2.06 7 0.76

Functional Innovation 3.16 1.33 1.77 7 0.96

Meaning Innovation 3.08 1.38 1.90 8 0.95

Typological Innovation 2.95 1.39 1.94 5 0.80

Brand Performance 3.05 1.48 2.20 5 0.85

Table 3: The effects of size of company towards brand performance

Size company Mean Sd F sig.

1-100 2.94 1.09

12.541 .000 101-250 3.16 1.25

250 and more 3.95 0.63

df=2,196

TABLE 4:Difference of effects of company size towards brand performance

(I) Company size Mean Difference (I-J) Sig.

1-100 101-250 -.22195 .471

250 and more -1.01031* .000

101-250 1-100 .22195 .471

250 and more -.78836* .000

250 and more 1-100 1.01031

* .000

101-250 .78836* .000