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“The Role of Brand Equity” by Karim Hashim Tarek Abd EL-Latif Walid Helmy Abd EL-Sadek

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“The Role of Brand Equity”

by

Karim Hashim

Tarek Abd EL-Latif

Walid Helmy Abd EL-Sadek

Submitted to: Dr. Hesham O. Dinana

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Contents

1. Abstract: --------------------------------------------------------------------------------------------- 2

2. Introduction: ---------------------------------------------------------------------------------------- 2

3. Literature review: ---------------------------------------------------------------------------------- 3

4. Brand Equity: ---------------------------------------------------------------------------------------- 7

5. Brand Equity Model: ----------------------------------------------------------------------------- 11

6. Research Methodology: ------------------------------------------------------------------------- 13

7. Data Collection: ----------------------------------------------------------------------------------- 15

8. Findings: -------------------------------------------------------------------------------------------- 18

9. Limitations and Future Research: ------------------------------------------------------------- 19

10. Conclusion: ----------------------------------------------------------------------------------------- 19

11. References: ----------------------------------------------------------------------------------------- 20

12. Appendix I: ----------------------------------------------------------------------------------------- 21

1Brand equity Model research

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1. Abstract:

The topic of brand equity continues to be of great importance to private sector firms

in the creation and development of both product and company brand strategy. This

research analyzes the relationship of different variables and brand equity with the

purpose of providing useful insight into brand management and advancement.

Research will analyze model proposed by Keller 1993 to be applied for brand equity

as main activity for marketing. While building brand, company should make sure that

the name is easy to spell and say; know how to pronounce brand name easily.

Research will apply proposed model on paint industry in Egypt. Findings reveal that

advertising is not as important a driver of brand equity in paint industry, while brand

awareness had major impact while build brand equity.

Introduction:

Promotion involves disseminating information about a product, product line, brand,

or company. It is one of the four key aspects of the marketing mix. (The other three

elements are product, pricing and place.)

Promotion is generally sub-divided into:

i. Above the line promotion: ATL is a type of advertising through media such as

TV, Radio, Print, Banners and Search Engines to promote Brands. Major uses

include TV and Radio advertising, Web and Internet banner ads. This type of

communication is conventional in nature and is considered impersonal to

customers.

ii. Below the line promotion: Much of this is intended to be subtle enough for

the consumer to be unaware that promotion is taking place. e.g. sponsorship,

2Brand equity Model research

Product PlacePrice Promotion

Sales Promotion

Personal Selling

Advertising

Public Relations

Direct Marketing

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product placement, endorsements, sales promotion, merchandising, direct

mail, personal selling, public relations, trade shows.

In a nutshell, while Above-the-Line promotions are tailored for a mass audience, BTL

promotions are targeted at individuals according to their needs or preferences. While

Above-the-Line promotions can establish brand identity, BTL can actually lead to a

sale. Above-the-line promotions are also somewhat impossible to measure well,

while BTL promotions are highly measurable, giving marketer’s valuable insights

into their return-on-investment.

Through the line promotion: TTL approach is a common term used nowadays coined

by media dinners. The TTL approach is where a mix of the two (ATL+BTL) are used

to integrate a marketers efforts and optimize returns from these separate

investments. The idea remains to optimize the ROI on marketing budget spent, by

focusing ones energy on winning smaller yet more crucial BTL battles than ATL wars

which are being raged by Sponsorship and logo positioning.

Brand elements referred as brand identities, are those trademark able decide that

serve to identify and differentiate the brand (Keller, 2003) Brand elements that

identify and distinguish one product from another, are brand names and brand

marks. A brand name is the portion of a brand that can be expressed verbally,

including letters, words or numbers (Bovee et al, 1995), and is any word or

illustration that clearly distinguishes one seller from another. A brand name usually

takes the form of words (Brassington & Pettitt, 1997).

A brand mark is a portion of a brand that cannot be expressed verbally. This includes

a graphic design or symbol (Bovee et al, 1995). The brand mark is thus the element of

the visual brand identity that does not consist of words, but of a design and symbol

(Brassington & Pettitt 1997), such as the cat's head of Cats brand. A logo, on the other

hand, is a unique symbol that represents a specific company or a brand name written

in a distinctive type style (Bovee, 1995).

3Brand equity Model research

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2. Literature review:

Brand elements, sometimes called brand identities, are those trade markable devices

that serve to identify and differentiate the brand. The main brand elements are brand

names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages,

and signage. Independent of the decisions made about the product and how it is

marketed, brand elements can be chosen in a manner to build as much brand equity

as possible. That is, according to the customer-based brand equity model, brand

elements can be chosen to enhance brand awareness; facilitate the formation of

strong, favorable, and unique brand associations; or elicits positive brand judgments

and feelings. The test of the brand-building ability of brand elements is what

consumers would think or feel about the product if they only knew about its brand

name, associated logo, and other characteristics. A brand element that provides a

positive contribution to brand equity, for example, would be one for which

consumers assumed or inferred certain valued associations or responses.

2.1. Criteria for choosing brand elements:

In general, there are six criteria in choosing brand elements (as well as more specific

choice considerations in each case) [Keller, Kevin Lane 1998]:

1. Memorability

2. Meaningfulness

3. Likability

4. Transferability

5. Adaptability

The first three criteria - memorability, meaningfulness, and likeability - can be

characterized as “brand building” in nature and concern how brand equity can be

built through the judicious choice of a brand element. The latter three, however, are

more “defensive” in nature and are concerned with how the brand equity contained

in a brand element can be leveraged and preserved in the face of different

opportunities and constraints.

The SARA model assumes that when individuals are asked a question that requires a

judgment (e.g., what is the brand personality of the co-branded identity?), they utilize

available images about the “information units” in long term memory (such as an

4Brand equity Model research

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image of the brand associations of a constituent brand). Each judgment is associated

with a number of images of the brands and the SARA model specifies which

“information units” are chosen as an anchor. Specifically, the selection of the anchor

and the direction of the judgment bias depend on distinct characteristics of internally

represented brand knowledge. Once a brand has been selected as an anchor, it will

bias the co-branded identity in such a way that its knowledge structure will be closer

to the anchor brand than the other constituent brand. Consistently with the SARA

model, it has been shown in a wide range of domains, such as information integration

theory (e.g., Fazio and Williams 1986), the accessibility-diagnosticity framework

(e.g., Feldman and Lynch 1988), brand alliances (e.g., Simonin and Ruth 1998), and in

research on priming, that the accessibility of information has a strong influence on

judgments. In the context of branding, Keller (1993) identifies brand awareness as

one of the most important factors for retrieval of information about the brand. Thus,

following the SARA model and the brand alliance study by Simonin and Ruth (1998),

we predict that brands with a high level of awareness in a co-branded identity are

more likely to be anchors than those with low awareness.

According to Kotler [2003], a brand is essentially a marketer's promise to deliver a

specific set of features, benefits and services consistently to the consumer. The most

successful brand emphasizes features that are both important to consumers and

quite different from those of competitors [Aufreiter, Elzinga & Gordon, 2003]. Brands

therefore serve as significant communication functions and in so doing, establish

beliefs among customers about the attributes and general image of product. Once a

brand has been established, the brand name and trademark serve to remind and

reinforce the beliefs that have been formed [Hoffman 2003]. To arrive at this point,

organizations need to make certain decisions about branding.

Organizations may either decide to brand their products, or not, and stay with

generic brands for the products, When marketers decide to select a brand, they

should keep in mind that the brand is key to product's personality [Bovee et al.

1995]. A brand needs to have consistent brand messages through all its uses. Thus, if

the same brand name is used for an organization, its retail outlets and own-label

products, then the same message has to be communicated by each. This will need to

be aligned with the organization's overall mission and strategy (Du Plessis, Jooste &

5Brand equity Model research

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Strydom, 2001). Hence considerable attention should also be focused on the selection

of brand name, because a product's name is vital to the image of a company and its

products (Longenecker et al, 1997). Kotler and Armstrong [2001] include the

following qualities that marketers should take into consideration when selecting a

brand name:

- The brand name should suggest something about the product's benefits and

qualities.

- It should be easy to pronounce, recognize and remember

- It should be distinctive

- It should translate easily into foreign languages

- It should be capable of registration and legal protection

2.2. How brand equity works:

- Build awareness and attract customers

- Build emotional connections with customers

- Reminds customers to repurchase

2.3. Key drivers of brand equity:

1- Brand awareness:

- Communications Mix

- Media

- Message

2- Customer attitude toward brand:

- Brand extension

- Brand partners

- Product placement & endorsers

3- Perception of brand ethics/behavior:

- Policy and standards

- Hiring practices

- Guarantees

6Brand equity Model research

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2.4. While marketer build brand equity; following errors should be avoid:

1- Under positioning:

Failing to present a strong central benefit or reason to buy this brand.

2- Over positioning:

Adopting such a narrow positioning that some potential customers may

overlook the brand.

3- Confused positioning:

Claiming two or more benefits that contradict each other.

4- Irrelevant positioning:

Claiming a benefit which few prospects care about.

5- Doubtful positioning:

Claiming a benefit that people will doubt the brand or company can really

deliver

2.5. Steps of building brand equity:

Figure below illustrate main four steps require to build brand equity:

1. Identity: Who are you?

2. Meaning: What are you?

3. Response: What about you?

4. Relationships: What about you and me?

7Brand equity Model research

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3. Brand Equity:

Brand equity is the result of customers' response to their knowledge of a specific

brand. Many contend that an organization's most important asset is its brand equity.

This substantiated by the fact that consumers will pay up to 30% more for a

differentiated, quality brand which is marketer leader [Blatch 2002]. Brand equity is

the value of a brand related to the brand's ability to attract future customers'

reliability [Solomon, Stuart 1997]. It generates value to the customer that can emerge

as enhanced brand loyalty [Aaker 1996]. Brand equity is formally defined as a set of

brand assets and liabilities linked to a brand, its name and symbol, which add to or

subtract from the value provided by a product or service to an organization and/or to

that organization's customers [Sheth, Mittal, Newmen 1999]. It is thus the overall

strength of a brand in the marketplace and its value to the organization that owns it.

The major asset categories of brand equity are brand loyalty, brand awareness,

perceived quality and brand associations [Aaker 1996]. Figure below illustrate brand

equity categories.

3.1. Brand awareness:

Brand awareness refers to the strength of brand's presence in the consumer's

mind [Aaker 1996]. It is a measure of the percentage of the target market that is

aware of a brand name [Bovee et al 1995]. Marketers can create awareness

among their target audience through repetitive advertising and publicity

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[Strdom et at 2000]. Brand awareness can provide a host of competitive

advantage for the marketer.

3.2. Perceived quality:

Brand equity creates and consistently delivers quality and value brands to

consumers [Webster 2002]. The second asset category of brand equity is

perceived quality. Perceived quality is a brand association that is elevated to the

status of a brand asset for various reasons, such as following [Aaker 1996]:

- Perceived quality drives financial performance.

- Perceived quality is often a major strategic thrust of products

- Perceived quality is linked to and often drives other aspects of how a

brand is perceived.

3.3. Brand loyalty:

A brand is both a physical and a perceptual entity. The physical aspect of a brand

can be found located in retail outlets or in the delivery of a service. The

perceptual aspect of a brand exists in a psychological space - in the consumer's

mind [Palumbo, Herbif 2005]. Brand loyalty refers to the level of commitment

that customers feel towards a given brand, as represented by their continuing

purchase thereof [Palumbo, Herbig 2000]. Brand loyalty refers to the level of

commitment that customers feel towards a given brand, as represented by their

continuing purchase thereof [Bovee et al 1995]. It is a form of repeat purchasing

behaviour based on a conscious decision to continue buying a product with a

particular brand or trademark [Solomon, Stuart 1997]. The ability to make a

consumer repeatedly seek out and buy one brand over another is thus brand

loyalty [Palumbo, Herbig 2000], and forms the third brand equity asset.

Building brand loyalty involves continuing to serve a customer in a satisfactory

way [Marconi 1999]. Managing brand loyalty is thus a key to achieving strategic

success, as well as brand equity. Companies that manage brand loyalty well are

likely to do the following [Aaker 1998]:

- Place a value on the future purchases expected from customers so that

existing customers receive appropriate resources.

- Measure the loyalty of existing customers.

9Brand equity Model research

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- Conduct exist interviews with those who leave the brand to locate points of

vulnerability.

- Have a customer culture, whereby people through the company are

empowered and motivated to keep the customer happy.

- Reward loyal customers with frequent-buyer programmes or special

unexpected benefits or premiums.

- Make customers fell that they are part of the company (customer clubs).

- Have continuing communication with customers, using direct mail, the web,

toll-free numbers and a solid customer backup company.

The ultimate objective of marketing is to get customers to buy the company's

products again and again. Complete customer satisfaction is the key to securing

customer loyalty and generating long-term financial performance [Strydom et al

2000].

3.4. Brand Associations:

High brand equity provides a company with many competitive advantages. A

powerful brand does not only enjoy a high level of consumer brand loyalty and

awareness [Kotler & Armstrong 2001], but also has positive associations in

consumer minds. Brand associations are perceptions and images that people link

with particular brands [Bovee et al 1995]. A positive brand image is created by

marketing programmes that link strong, favourable, unique and admirable

associations to the brand in the consumer's memory [Keller 2003].

The associations attached to a company and its brands can therefore be key

enduring business assets. A brand association is anything that is directly or

indirectly linked in the consumer's memory to a brand [Aaker 1996]. A brand

represents the key to a product's personality [Bovee et al 1995]. It also says

something about the image of a company and its products [Longenecker et al

1997]. For marketers to create the right brand identity, brand meaning, brand

responses and brand relationship can be complicated and difficult process

[Keller 2003].

10Brand equity Model research

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When marketers focus on creating positive brand awareness in the minds of

consumers, they should keep in mind that, although product-attribute

associations can be powerful (especially if a brand has a key attribute), the

associations can fail to differentiate because there is a tendency for all brands to

position according to the most important product attributes. Furthermore, an

advantage on a product attribute is an easy target that is likely to be copied or

eventually surpassed. Finally, a strong product-attribute association limits brand

extension options and this strategic flexibility on the brand [Aaker 1996]

It is thus true that building strong brands and establishing brand equity is

becoming increasingly challenging [Leone 1996]. Strong brands therefore go

beyond product attributes and differentiate on brand associations [Aaker 1998],

such as:

- Company associations: Focus on attributes of the organization.

- Brand personality: Uses the brand-as-person metaphor to help

communicate a brand and its relationships to customers.

- Symbols: Provide cohesion and structure to a brand and make it much

easier to gain recognition and recall.

11Brand equity Model research

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4. Brand Equity Model (keller1993):

Keller developed brand equity model as illustrated in figure below. Using number of

sub-dimensions (Keller, 1993) could be used to build a strong brand equity. The

pinnacle of the pyramid where a harmonious relationship exists with customers.

Integrating marketing communications to build brand equity, Kevine Keller 1993

Following checklist will be used to evaluate Keller Model:

• Concept of brand equity are specified in the model.

• The model concepts are relevant to solving the brand equity covering clear

variables that have direct effect to solve the problem at hand.

• Brand equity and IMC principle components are clearly defined.

• The relations are properly defined and labeled.

• The concept specific enough to be operation alized reliably and with validity.

• Assumptions made in the model are clear.

12Brand equity Model research

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• The limitations of the model are not stated.

• The outcomes of the model supported by common sense with Keller and Aaker

theories of brand equity.

Proposed model focus on brand equity, is “the ‘added value’ with which a given brand to

a product” [Farquhar 1989]. High brand equity is considered to be a competitive

advantage. In other words, high brand equity generates a “differential effect”, higher

“brand knowledge”, and a larger “consumer response” [Keller 2003], which normally

leads to better brand performance, both from a financial and a customer perspective.

- Financial Perspective:

Financial value-based techniques extract the brand equity value from the value

of the firm’s other assets (Kim, Kim, and An 2003). Simon and Sullivan (1993)

define brand equity as “the incremental cash flows which accumulate to branded

products over and above the cash flows which would result from the sale of

unbranded products”.

- Customer Perspective:

According to Lassar, Mittal and Sharma (1995), five dimensions configure brand

equity: performance, value, social image, trustworthiness, and commitment.

Aaker and Joachimsthaler (2000) define brand equity as brand assets linked to a

brand’s name and symbol that add to, or subtract from, a product or service.

Brand Equity has direct relation with Marketing communications program which will be

affected by:

i. Direct Marketing:

Direct marketing is a database-driven process of directly communicating with

targeted customers or prospects using any medium to obtain a measurable

response or transaction via one or multiple channels, (Lester Wunderman,

1967). This definition incorporates the key elements found throughout the

research: database, interactivity, direct communication, target customers, any

medium, response generation, and multiple channels.

13Brand equity Model research

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ii. Public Relation (PR):

PR is a vital communications service that works with all marketing activities. It

should be looked at as the communication principles and messages that

accompany all marketing efforts. Public Relations always accompany any

marketing of products, services, and ideas (Harold Lasswell, 1928).

iii. Personal Selling:

Personal selling could be define as “the face-to-face process of a company

representative (or small group of representatives) and a customer identifying

customer problems and solving them through the purchase and application of

the representative’s products.”This definition suggests several comments about

personal selling.

iv. Advertising:

Advertising could be defined as follows ‘Make an announcement in a public

place; describe or present goods publicly with a view to promoting sales’, (Daniel

Starch, 1920). It is a form of communication intended to persuade its viewers,

readers or listeners to take some action. It usually includes the name of a product

or service and how that product or service could benefit the consumer, to

persuade potential customers to purchase or to consume that particular brand.

v. Sales Promotion:

Sales promotion consists of promotional activities other than advertising,

personal selling, and publicity, which stimulate purchases. It normally involves a

direct inducement (such as money, prizes, extra products, or specialized

information) that provides extra incentives to buy now or buy more. (Sue

Peattie, 'The use of sales promotion competitions in social marketing', March

1999).

14Brand equity Model research

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Customer Loyalty

Brand Equity

AdvertisingBrand Awareness

5. Research Methodology:

5.1. The research problem:

The global brand faces some problems when entering a new market due to the

changing in economic, culture & political environment. This research need to assess

Kapci brand equity in the Egyptian market in order to identify the factors that has

direct effect on brand equity in Egypt.

Reference to the literature review, this research attempted to measure the effect of

brand awareness and advertising on Kapci Brand equity, the research selected these

two variables that have positive effect on the Egyptian customer as a result of

market experience, although the importance of brand equity regarding to the

customer loyalty.

Paint industry will be target market for this research. Paint market divided into

three sections:

- Car Refinish B2B

- Wood Coatings B2B

- Decorative Paint B2C

Research will focus on Car Refinish to illustrate the efficiency for Keller model on

brand equity in B2B industry.

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5.2. The research objectives:

This research aim to achieve the following objectives:

1- Measure the Kapci brand awareness in the Egyptian market.

2- Determine the important factors that effect on the brand equity

5.3. Target segment:

Sample consists of 20 used to test Keller model for brand equity. The

demographic and psychographic data of target sample as follows:

1. Demographics:

- Gender: Male

- Age: 30 - 50

- Income: between 1000 – 3000 L.E/Month.

- Social status: Single or Married.

2. Psychographics:

- Social class: Low - Medium class.

- Life Style: had direct related with car refinish.

5.4. Hypotheses:

H0: Does Brand Awareness has impact on Brand Equity (Kapci)

H1: Does Advertising has impact on Brand Equity (Kapci)

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6. Data Collection:

Questionnaire – Appendix I – used to for direct survey to test above Hypotheses.

- 75 % mention that success for Kapci in car refinish market is due to strong brand

awareness.

- 20 % mention that advertising had direct impact on Kapci brand equity on car

refinish market.

- 5 % had no answer as they are no direct input to choose car refinish brand.

Sample illustrates high impact of service & quality for their decision to choose brand

and had direct impact for brand loyalty.

75%

20%5%

RESPONSES DISTRIBUTION

AGREE FOR BRAND AWARENESSAGREE FOR ADVERTISINGNO ANSWER

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7. Findings:

Kevin Lane Keller's Customer-Based Brand Equity Model depicts the process that

goes into building strong brands. This model is set in the realm of brand-added

value (customer-based brand equity, i.e. the added value a brand offers

customers/consumers), which Keller defines as follows: the differential effect

that consumers' brand knowledge has on their response to the marketing of that

brand.

Research revealed the following:

1. Respondents placed a greater emphasis on the manufacturers’ corporate

brand names rather than the individual product brands, and demonstrated

greater awareness of these products, suggesting a B2B brand equity framework

needs to give major attention to the corporate brand names, which will approve

validation of H0 for B2B.

2. Respondents identified primarily with company brands and spoke about their

relationships with company representatives rather than product brands.

3. Brand elements such as slogans and brand names lacked relevance to

respondents who explicitly stated they were more interested in the product

offering, which will prove invalid for H1 for B2B.

4. When asked about brand associations most respondents identified product

performance features, which would be categorised in Keller’s performance

building block. Style and design which feature in the Keller model were not

mentioned, which will prove validation for H0 for B2B.

5. Respondents were seeking a system that could be easily implemented and

used, that satisfied all the various necessary applications, and that was flexible

enough to be upgraded, expanded and improved over time. Evidence of proven

technologies also emerged as another important B2B performance attribute.

6. Respondents failed to demonstrate any behavioural loyalty, attitudinal

attachment, sense of community, or active engagement as per Keller’s brand

resonance building.

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8. Limitations and Future Research:

This research begins the assessment and adaptation of a major brand equity model for

the B2B context, but it is by no means the end. Although insights and challenges have

been identified in applying Keller’s model, there is a risk the results may represent

industry-specific factors that are not representative of all B2B markets. Result in this

research based could be applied on car refinish market, as other paint market although

it might be in Egypt but had different characteristics. For example decorative paint is

based on B2C while car refinish based on B2B. Result on this research could be taken in

the future as a guideline for further research about brand equity.

9. Conclusion:

Several factors affects on brand equity like advertising, personal selling, direct

marketing and brand awareness as illustrated in Keller model. However these factors

are not equal effects as its effect will be depends on product range, as illustrated in this

research in Brand awareness had main impact on brand equity in paint market.

Research acknowledged the importance of a high quality physical product as well as

augmented services to build high brand equity in paint industry. Research illustrate

strong relationship between brand awareness and brand equity in paint industry.

Result illustrates that Kapci gain brand equity via strong brand awareness – which gain

via value for money products- rather than advertising.

19Brand equity Model research

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Managing Relationships". Journal of Marketing, 1998.

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Appendix 1

Questionnaire

Dear respondent,

This questionnaire is part of an DBA thesis aiming to assess Kapci Brand equity in the Egyptian market and the effect of the promotion campaign on the brand equity. Please note that all your answers will be treated as strictly confidential, it will be used ONLY for the analysis purposes of the researcher's thesis.

1- What is your car brand?

a- BMWb- RENAULT c- TOYOTAd- SKODA e- No Car

2 What brand name could you remember for a Car Refinish?

a- Kapcib- MIDOc- ICI

3- Are you aware of Kapci products & services?

a- Yes b- No

If NO please move to Q 8

4- How you here about Kapci? You can select more than one

a- T.V adsb- Outdoorsc- F.M radio channel d- Others ( please specify ……..…… )

5- How long you buy Kapci products?

a- Less than one years b- Less than 3 years c- Less than 5 yearsd- Less than 7 years

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6-Which types of Kapci products & services Do you use?

a- Decorative Paints

b- Wood Coatings

c- Car Refinish

7- for what reason do you recommend Kapci to others?

a- Better price b- Promotion campaignc- Car recommendationd- Others (please specify ……..…… )

8. What motivates you to products from your selected brand?

a- Brand

b- Price

c- Service

9. Would you recommend your selected brand to others?

a- Yesb- No

10- Which types of campaign attract you?

Advertising

b- Social gathering

c- Promotion campaign

d- Industry events

e- Sponsorship

11- Determine your Satisfaction or Dissatisfaction towards the following statements?

Highly Satisfaction

SatisfactionUncertainDissatisfaction

Highly Dissatisfactio

nKapci products price is fair relative to the

quality

Kapci has high performance

The quality is value for money

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Products & service is just on time

Kapci represents a very good services in the Egyptian market

12. Age:

a- Less than 25b-from 25 less than 30a- from 30 less than 35b- from 35 less than 40c- above 40

13. Gender:

a- MaleB-Female

14. Monthly Income:

a- Less than 1000 L.E.

b-From 1000 and less than 3000 L.E.

c- More than 3000 L.E.

15. Occupation:

Please specify ........

Thank you so much for completing this question

23Brand equity Model research