Determinants of Brand Equity in the Dairy Milk Sector

InternationalConferenceonOperationResearch[ProceedingBook],12February,2012,P.236249

OperationalResearchSocietyofNepal Page1

DETERMINANTS OF CONSUMER-BASED BRAND EQUITY IN NEPALESE DAIRY MILK SECTOR

Sajeeb Kumar Shrestha, M. Phil. Teaching Assistant

Shanker Dev Campus Ph. No: 014284634

Mobile: 9841281851

E-mail: [email protected]

Abstract: This study attempts to investigate the impact of brand equity dimensions on

building brand equity of dairy milk sector in Nepal with moderating promotion mix variables.

It is used convenient sample of 377 respondents through survey research from different

territories in Kathmandu valley. This study used reliability analysis, descriptive statistics,

factors analysis, and correlation and regression analysis to test reliability, summarization

and measuring casual relationships among brand equity dimensions with brand equity itself.

The findings indicate that all the brand equity dimensions (perceived quality, brand

awareness, brand associations/image, brand loyalty and brand organization) have greater

impact on building brand equity. The research showed that Dairy milk companies should do

more on advertising and sales promotions programs to strengthen the brand value of their

products.

Keywords: brand equity, dairy milk, factor analysis.

1. Introduction

Brand equity is one of the most important concept in marketing, and it has well-recognized as

one of the most valuable intangible assets by most firms [1, 2, 3]. Brand equity is incremental

utility and value endowed to a product or service by its name [4,5,6,7]. The concept of brand

equity began to be used widely in the 1980s by advertising practitioners [8]. All



conceptualizations of brand equity agree today that the value added to a product by

consumers associations and perceptions of a particular brand name [9, 10].

Keller [11] noted that consumer-based brand equity is the differential marketing effect of

brand knowledge on consumer response to the marketing of the brand, and it arises from a

brand that is familiar to customers and is associated in their memories.

David Aakers [12] brand equity model is the mother of many following researchers findings

and results. The model has become the standard template for researchers such as Kapferer

[13] and Mela et al. [14], yet their models are built upon similar factors that Aaker [12]

stresses. Consequently, it is felt that this model has been provided the whole spectrum within

the field of brand equity.

Shrestha [15] found that three among four variables of brand equity (perceived quality, brand association and brand loyalty) have played significnat role in creating brand equity of dairy

milk brands in Nepal. But, It is found brand awareness has no significant impact on creating

the brand equity.

Anantaya and Sirada [16] investigated that Thai female consumer's purchase decision on

foreign brand makeup is not directed by brand loyalty, brand awareness, brand association

and brand perceived quality. Also the result derived can not predict the future trend regarding

brand equity and Thai female buyer.

Ukpebor and Ipogah [17] revealed all the dimensions of consumer-based brand equity will

have influence on consumer's perception of brand.

There have been three different perspectives for considering brand equity; the customer-

based perspectives, the financial perspectives and combined perspectives. Early researches

have concentrated on measuring a brand's equity with the use of a variety of financial

techniques [18, 19, 9, 20]. This study has focused mainly on the customer based perspectives.

The advantage of conceptualizing brand equity from the Customer- based perspective is that



it enables managers to consider specifically how their marketing programs improves the

value of their brands in the minds of consumers [21].

This paper focuses to establish Perceived Quality (PQ), Brand Awareness (BAW), Brand

Associations/image (BAS), and Brand Loyalty (BL) as determinants of consumer based

brand equity with considering promotions mix variables like Advertising (AD) and Sales

Promotion (SP) as moderating variables to develop a conceptual model.

Very few researches were conducted on the impact of brand equity dimensions on measuring

brand equity of dairy milk in Nepal. The research tried to express the different sources of

brand equity dimensions with moderating promotion variables on measuring brand equity of

dairy milk markets in Nepal.

This study addresses the following research questions:

- What are the influential factors of brand equity dimensions, i.e., (perceived quality, brand

awareness, brand associations/image, and brand loyalty) on consumer based brand equity

creating of dairy milk in Nepal?

- What are the relations between the consumer-based brand equity dimensions with

consumer based brand equity itself of dairy milk in Nepal?

The present study has been focused on consumers based perception about brand equity on

brand equity of dairy milk markets in Nepal.

This study aims to achieve the following objectives:

- To examine the most influential factor among the brand equity factors on consumer

response.

- To measure the relations between the consumer-based brand equity dimension with brand

equity itself.



This research framework of this study is shown below in Figure 1.

"Figure 1 about here"

1.1 Research Hypotheses

This research has set following alternative hypotheses:

H1: Perceived Quality has a significant positive direct effect on brand equity.

H2: Brand Awareness has a significant positive direct effect on brand equity.

H3: Brand Association/Image has a significant positive direct effect on brand equity.

H4: Brand Loyalty has a significant positive direct effect on brand equity.

2. Methods

The research design of this study is descriptive as well as analytical Research. This study

examines the impact of brand equity dimensions on measuring brand equity with considering

promotion mix variables.

Survey research is applied for this study. Direct responses of the respondents were taken.

Data were generated in five point likert scale anchored by Strongly Disagree = 1 to

Strongly Agree =5. Top of mind question like, 'Which brand of dairy milk comes to your

mind?' was also asked to the respondents. The questionnaire was developed on the basis of

literature review.

The researcher was taken the convenience sampling methods. 400 questionnaires were to the

respondents in different territories in Kathmandu valley, but only 377 responses have been

successfully obtained by the researcher. It is app. 94 percent success rate for this survey. 63

percent of the respondents are male whereas 37 percent of the respondents are female. It

indicates two-third of the respondents is male and one-third of the respondents are female.



Majority of the respondents are age between 20-35 years old, accounting for 92 percent.

Likewise majority of the respondents are from bachelor level respondents, accounting for

43.2 percent.

The primary variable of the study is perceived quality, brand awareness, brand

association/image and brand loyalty. Here, overall brand equity is the dependent variable and

it is measured by the independent variables like, perceived quality, brand awareness, brand

association/image and brand loyalty. The moderating variables are added in this research are

promotion variables like, advertising and sales promotion.

The final version of the questionnaire was made up of three major parts: (i) evaluation of four

dimensions of brand equity (ii) evaluation of promotion variables (i. e., advertising and sales

promotion) analysis, and (iii) demographic questions. Databases such as SPSS 13.0, Excel,

were used for this research.

In order to accomplish the objectives of the study, reliability analysis was done to check the

scale item's reliability [22]. Factor analysis [23] was done to extract the real factors

representing brand equity. Descriptive statistics like mean and standard deviation was used.

Multiple regression analysis was used for testing hypotheses. The result of analysis has been

properly tabulated, analyzed and interpreted.

2.1 Regression model

BE = + 1 PQ + 2 BAW +3 BAS + 4 BL + 5 AD + 6 SP + U ................... (1) Where, BE = Brand Equity; = Constant; i = Co-efficient or slope of regression model; PQ = Perceived Quality; BAW = Brand Awareness; BAS = Brand Associations/Image; BL =

Brand Loyalty; AD = Advertising; SP = Sales Promotion; and U = Error term.

3. Results



3.1 Top of Mind Recall

Almost 213 out of 377 respondent having 56 percent respondents have mentioned DDC milk

whereas only 27 percent respondents have recognized Sitaram milk. Others brands are not

represented effectively to consumer's top of mind.

"Table 1 about here"

3.2 Reliability Analysis

The reliability of used measurement scales was tested using Cronbach's alpha coefficient.


Table 2 shows the results of reliability of measurement scales used for measuring

independent and dependent variables of brand equity dimensions. The applied measurement

scales exhibits satisfactory levels of reliability. One scale item PQ5 was eliminated from

Perceived Quality to increase the value of the measurement. Similarly, one scale item BAW5

(among 5 items) was eliminated from Brand Awareness to increase the value of the

measurement.

For factor analysis, remaining 22 scales items from Perceived quality, Brand awareness,

Brand Associations/Image & Brand Loyalty were forwarded to test convergent validity and

discriminant validity of measurement scales [24]. It is done the dimension reduction and

factors extraction there.

3.3 Descriptive Statistics




Table 3 shows the mean of perceived quality, brand awareness, brand association/image,

brand loyalty items are above the level of 3.0. Except for moderating variables advertising

and sales promotion has mean value below 3. Brand loyalty, Overall brand equity and

moderating variables advertising and sales promotion has standard deviation more than 1 is

recorded, the rest of the mentioned variables were below or near to 1.0 standard deviation. It

means that the mean result is accurate.

3.4 Factor Analysis of Brand Equity Variables

Convergent and Discriminant validity of measurement instrument was tested using factor

analysis [24]. Before proceeding for factor analysis, appropriateness of factor analysis is

to be assessed. This can be done by examining adequacy through Kaiser-Meyer-Olkin

(KMO) statistic. KMO value greater than 0.5 is considered to be adequate [25].

From the table 4, value of KMO is acceptable indicating that pattern of correlation are

relatively compact and factor analysis can yielded distinct and reliable results. Barlett

test result is significant (P




Table 6 list eigen values associated with each linear component associated with each linear

component (factor). Before extraction 22 linear components were identified within the data

set. Eigen values associated with each factor represent the variance explained by each linear

component. Five components are identified totaling cumulative contribution of fifty percent.


Scree plot shown in figure 2 represent point of inflection of the curve. The curve trails

after five factors before stable plateau. Therefore, first five factors are retained.


Table 7 gives components after varimax rotation. The matrix loading less than 0.5 are to be

suppressed or excluded from the output. Here, scale item BAW1, BAW4, BAS3, BAS8, and

BL1 are excluded.


Table 7 represents rotated component matrix representing matrix of factor loadings for each

variable on to each factor. It can be seen from table 5 that variables PQ1, PQ2, PQ3, PQ4,

BAS4, BAS5, and BAS6, having values of principal components of 0.509, 0.636, 0.521,

0.628, 0.639, 0.641, and 0.636 respectively have loadings on factor 1. The factor 1 is termed

as refinement of Perceived Quality. For factor 2 we see that BAW2, BAW3, BAS1, BL2,

and BL3, having values of principal components of 0.633, 0.574, 0.573, 0.65, and 0.621

respectively. These factors are clubbed into factor 2 as Brand Awareness dimension. For

factor 3 it is combination of variables BL4, BL5, and BL6 with values 0.673, 0.519, and

0.576 respectively and can be clubbed into refinement of Brand Loyalty factor. Factor 4 is



combination of two BAS2, and BL5 with values 0.742, and 0.579 representing the refinement

of Brand Associations. Factor 5 has only one variable BAS7 with values 0.741 and termed

as Brand Organization.

3.5 Modified research framework and hypotheses

Based upon the factor analysis, one variable, Brand Organization, was added in the

conceptual framework and the modified framework is shown below.


These modified hypotheses were being derived from this model are as follows:

H1: Perceived Quality has a significant positive direct effect on brand equity.

H2: Brand Awareness has a significant positive direct effect on brand equity.

H3: Brand Loyalty has a significant positive direct effect on brand equity.

H4: Brand Association/Image has a significant positive direct effect on brand equity.

H5: Brand Organization has a significant positive direct effect on brand equity.

3.6 Correlation Analysis

Karl Pearson's Correlation coefficient is used to find out the relationship between dependent

and independent variables. Correlation is used to describe the relationship between two

continuous variables, both in term of the strength of the relationship and the direction [26].

The analysis of correlation is derived and shown below table 8.


Table 8 depicts that there are significant correlations between perceived quality and overall

brand equity (r = 0.275, p < 0.01), brand awareness and overall brand equity (r = 0.103, p <



0.05), brand loyalty and overall brand equity (r = 0.284, p < 0.01), brand association and

overall brand equity (r = 0.308, p < 0.01) and brand organization and overall brand equity (r

= 0.152, p < 0.01).

3.7 Multicollinearity Statistics

To be linearity, one assumption of multiple regression is that all the independent variable has

no relation with each other. If one or more independent variables are related with each other

there is seen the problem of multicollinearity [27].


From table 9, tolerance values of all brand equity dimensions are above 0.10. Simultaneously,

the VIF value is less than 10; it is ascertain that there is no effect of multicollinearity problem

that creates dependency in independent variables [23, 28].

3.8 Multiple Regression Result and Their Interpretations


From table 10, the model of BE = 3.065 + 0.26 PQ + 0.101 BAW + 0.271BL + 0.293 BAS

+ 0.144 BO + 0.057 AD 0.032 SP + U

3.9 Testing of Hypotheses

p-value of Perceived Quality coefficient is 0.000 which is significant at 5% level of

significance. So, Hypothesis 1 is accepted.

p-value of Brand Awareness coefficient is 0.017 which is significant at 5% level of


p-value of Brand Loyalty coefficient is 0.000 which is significant at 5% level of significance.

So, Hypothesis 3 is accepted.



p-value of Brand Association/Image coefficient is 0.000 which is significant at 5% level of


p-value of Brand Organization coefficient is 0.001 which is significant at 5% level of


4. Discussion

This study was limited to establishing the impact of brand equity dimensions on overall brand

equity of dairy milk markets in Nepal.

- For product stimuli, it is taken only product category like dairy milk brands in Nepal and

other popular brands like soft drinks, brewery, and biscuits are not taken as stimuli for the

study.

- Financial performance measurements have not been performed in this research.

- The study is based on the data available from the self administered questionnaire methods

among the selected consumers.

- Convenience sampling is taking for participation.

- Data are primary in nature.

For top-of-mind recall, DDC dairy milk brand has got first ranking on consumers' rating. The

second rank is Sitaram milk, followed by Todays dairy milk.

In Regression analysis, all the brand equity dimensions like perceived quality, brand

awareness, brand loyalty, brand association/image and brand organization are significant.

These all factors are influential factors for creating brand equity of dairy milk markets in

Nepal with considering moderating promotion mix variables.

All the brand equity dimensions are significantly correlated to overall brand equity.



This findings is consistent with as prior research [7, 6, 29, 1]. The study is consistent with

Shreatha [15] to measure consumer-based brand equity of dairy milk brands in Nepal. The

findings express that perceived quality, brand association and brand loyalty have played

significant role in creating brand equity of dairy milk in Nepal. But, brand awareness has

been found to have negative impact on creating the brand equity.

The study is also similar with Ukpebor and Ipogah [17] to indicate the importance of

consumer based-brand equity on consumer perception of brand: a case study of fast food

restaurants in Sweden. The findings concluded that brand association and brand loyalty are

influential dimensions of brand equity. Weak support was found for the perceived quality and

brand awareness dimensions.

The result of present study is not consistent with the research done by Anantaya and Sirada

[16] on the impact of brand on Thai female consumers in purchase decision of foreign

makeup product. It is found contrast result is Thai female consumer's purchase decision on

foreign brand makeup is not directed by brand loyalty, brand awareness, brand association

and brand perceived quality.

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Table/Figures:

Figure 1 Schematic diagram of research framework

Figure 2 Scree Plot

Figure 3 Modified theoretical figure of research framework

Perceive Quality

Brand Awareness

Brand Association/Image

Brand Loyalty

Brand Equity

Brand Equity dimensions

Advertising Sales Promotion

Promotion Mix

Component Number

Eig

enva

lue

22212019181716151413121110987654321

6

5

4

3

2

1

0

Perceived Quality

Brand Awareness

Brand Loyalty

Brand Association/Image

Brand Equity

Brand Equity dimensions

Advertising Sales Promotion

Promotion Mix

Brand Organization



Table 1 Top of Mind Recall

Brands Frequency Percent DDC 213 56.50

Sitaram 102 27.05 Today 39 10.34 Others 23 6.11 Total 377 100

Table 2

Reliability Analysis Code Particulars Alpha PQ Perceived Quality 0.703

BAW Brand Awareness 0.609 BAS Brand Association/Image 0.701 BL Brand Loyalty 0.710

OBE Overall Brand Equity 0.737 AD Advertising 0.788 SP Sales Promotion 0.814

Table 3 Descriptive Statistics of Brand Equity and Moderating Variables Particulars Mean S. D.

Perceived Quality 3.776 0.992 Brand Awareness 3.776 0.992

Brand Associations/Image 3.860 0.963 Brand Loyalty 3.907 1.042

Overall Brand Equity 3.113 1.270 Advertising 2.178 1.270

Sales Promotion 2.345 1.220

Table 4 KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.879Bartlett's Test of Sphericity Approx. Chi-Square 2086.474 Df 231 Sig. 0.000

Table 5 Communalities

Initial Extraction (PQ1) Trust the quality of Milk 'X' 1 0.47 (PQ2) Very good quality 1 0.479 (PQ3) Offers excellent features 1 0.503 (PQ4) Reliable products 1 0.459 (BAW1) Characteristics come to mind quickly 1 0.37 (BAW2) Recognize quickly among other brands 1 0.507 (BAW3) Familiar with 1 0.467



(BAW4) Recall symbol or logo 1 0.283 (BAS1) Unique brand image than other brands 1 0.609 (BAS2) Respect people who consume Milk 'X' 1 0.655 (BAS3) Like brand image 1 0.34 (BAS4) Trust the company 1 0.451 (BAS5) Tasty 1 0.514 (BAS6) Good for health 1 0.593 (BAS7) Belongs to reputed organization 1 0.66 (BAS8) Based on modern technology 1 0.532 (BL1) Loyal to Milk 'X' 1 0.465 (BL2) First choice while buying 1 0.575 (BL3) Provides me satisfied products 1 0.661 (BL4) Purchase even if price will be higher 1 0.474 (BL5) Recommend to friends 1 0.663 (BL6) Will not buy if Milk 'X' is at the store 1 0.392

Extraction Method: Principal Component Analysis.

Table 6

Total Variance Explained Component

Initial Eigenvalue

Extraction Sums of Squared Loadings

Rotation Sums of Squared Loadings

Total

% of Variance

Cumulative%

Total

% of Variance

Cumulative%

Total

% of Variance

Cumulative%

1 5.971 27.139 27.139 5.971 27.139 27.139 3.376 15.346 15.346 2 1.785 8.115 35.254 1.785 8.115 35.254 2.871 13.049 28.395 3 1.243 5.652 40.905 1.243 5.652 40.905 2.032 9.235 37.629 4 1.084 4.929 45.834 1.084 4.929 45.834 1.469 6.677 44.307 5 1.038 4.72 50.555 1.038 4.72 50.555 1.375 6.248 50.555 6 0.977 4.441 54.995 7 0.919 4.177 59.173 8 0.872 3.965 63.138 9 0.828 3.762 66.899

10 0.765 3.479 70.378 11 0.724 3.292 73.67 12 0.706 3.208 76.878 13 0.673 3.058 79.935 14 0.647 2.941 82.876 15 0.609 2.766 85.642 16 0.574 2.607 88.249 17 0.529 2.402 90.651 18 0.473 2.148 92.799 19 0.456 2.071 94.87 20 0.414 1.88 96.75 21 0.382 1.736 98.486 22 0.333 1.514 100

Extraction Method: Principal Component Analysis.



Table 7 Factor Structure after Varimax Factor Rotation

Component 1 2 3 4 5 (PQ1) Trust the quality of Milk 'X' 0.509 (PQ2) Very good quality 0.636 (PQ3) Offers excellent features 0.521 (PQ4) Reliable products 0.628 (BAW1) Characteristics come to mind quickly (BAW2) Recognize quickly among other brands 0.633 (BAW3) Familiar with 0.574 (BAW4) Recall symbol or logo (BAS1) Unique brand image than other brands 0.573 (BAS2) Respect people who consume Milk 'X' 0.742 (BAS3) Like brand image (BAS4) Trust the company 0.639 (BAS5) Tasty 0.641 (BAS6) Good for health 0.636 (BAS7) Belongs to reputed organization 0.741 (BAS8) Based on modern technology (BL1) Loyal to Milk 'X' (BL2) First choice while buying 0.65 (BL3) Provides me satisfied products 0.621 (BL4) Purchase even if price will be higher 0.673 (BL5) Recommend to friends 0.519 0.579 (BL6) Will not buy if Milk 'X' is at the store 0.576

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 8 iterations.

Table 8 Correlation Analysis of Consumer-Based Brand Equity Dimensions

OBE Perceived Quality

Brand Awareness

Brand Loyalty

Brand Association

Brand Organization

OBE Correlation 1 p-value

Perceived Quality Correlation .275 1 p-value 0

Brand Awareness Correlation .103 0 1 p-value 0.045 1

Brand Loyalty Correlation .284 0 0 1 p-value 0 1 1

Brand Association Correlation .308 0 0 0 1 p-value 0 1 1 1

Brand Organization Correlation .152 0 0 0 0 1 p-value 0.003 1 1 1 1

Table 9 Collinearity Statistics

Brand Equity variables Tolerance VIF Perceived Quality 0.999 1.001 Brand Awareness 0.997 1.003

Brand Loyalty 0.99 1.01



Brand Association 0.987 1.013 Brand Organization 0.998 1.002

Table No. 10 Output of Regression Coefficients, ANOVA and R2

Coefficient value of B S. E. p-value Constant 3.065 0.116 0.000

PQ 0.26 0.042 0.000 BAW 0.101 0.042 0.017

BL 0.271 0.042 0.000 BAS 0.293 0.042 0.000 BO 0.144 0.042 0.001 AD 0.057 0.052 0.272 SP -0.032 0.053 0.544

R .536 R2 0.287

Adj. R2 0.274 S. E. 0.811

F-Value 21.226

p-value of F test 0.000

Sig. at 5% level Model : BE = 3.065 + 0.26PQ + 0.101BAW + 0.271BL + 0.293BAS + 0.144BO + 0.057AD 0.032SP + U

Documents

Determinants of Brand Equity in the Dairy Milk Sector