WALIA journal 34(1): 52-58, 2018 Available online at www.Waliaj.com ISSN 1026-3861 © 2018 WALIA

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Antecedents and consequences of brand equity-a research to determine the role of

brand affect

Humaira Abbasi 1, Khuram Shafi 2,*, Faheem Ahmad Khan 1

1Department of Management Sciences, SZABIST, Islamabad Pakistan

2Department of Management Sciences, CIIT Wah Cantt, Pakistan

Abstract: Despite the fact that there is an immense level of research related with the impact of product quality and service quality on brand equity, the role of brand affect as the mediator between brand equity and brand loyalty (attitudinal and behavioral loyalty) has not been cross-examined in previous literature. To understand how this mediating mechanism brand affect which ultimate leads increase the behavioral loyalty and attitudinal loyalty of the customers, we advanced a conceptual theory using TRA , and examined the data from a sample of 360 Marriot hotel customers, results from multivariate analysis shows that the relationship between brand equity and attitudinal loyalty is partially mediated by brand affect. The results also provide a wide range of implications for managers and researchers in improving the brand equity and customer’s loyalty. The study is one of the exceptional efforts to provide evidence regarding the antecedents and consequences of brand equity the mediating role of brand effect between brand equity and loyalty. Key words: Brand equity; Brand affect; Product quality; Service quality; Attitudinal loyalty and behavioral loyalty

1. Introduction

Brand loyalty is a constant relation of the customer with the specific brand. The repetitive purchase behavior of the consumer is loyalty. Aaker (1997) defined brand loyalty as “personality dimensions which creates preference by bridging gap through building trust, encouraging commitment of customer and ultimately shaped brand loyalty.”

In past research, the brand loyalty has received prominent consideration in hospitality industry. Brand loyalty increases the repetitive purchase behavior of the consumers (Dortyol, Varinli & Kitapci, 2014; Peng, Zhao & Mattila, 2015), willingness to pay more in the comparison of other product’s price (Zemke, 2015), increase the chance of success of hotels (Gemar, Moniche & Morales, 2016), increase the customer satisfaction and worth of organization (Ren, Qiu, Wang & Li, 2016; Ryu, Lee & Kim, 2012; Dortyol et al., 2014), enhances the relation of customer and organization (Su, Swanson & Chen, 2016), reduces the organization’s operational cost (Molina Azorín et al., 2015), and build up the image of the business and make it more strong and positive (Durna, Dedeoglu, & Balikçioglu, 2015). Hence, the customer loyalty is very important for the hotels to survive and to gain competitive edge (Lee et al., 2014). Therefore, during past few years, brand loyalty has become the very important factor in hospitality industry (Bowen & McCain, 2015), because brand loyalty can trigger the profits of the organization (Kandampully Zhang, & Bilgihan, 2015).

Early social scientist relates it to consumer psychology when any individual shows some intent

to a particular brand. In this regard Ajzen and Fishbein (1980), Theory of Reasoned Action (TRA), behavior is most phenomenon contribution. They integrates three major dimensions of behavioral aspect of human psychology including cognitive response, behavioral intention and subjective norm by presenting TRA. Particularly, with some exception (Oliver 1999; Zeithaml, Berry, & Parasuraman 1996), in this study our focus is on the impact of brand equity on the two dimensions of loyalty which are attitudinal loyalty and behavioral loyalty, with the mediating role of the brand affect, and the impact of product quality and service quality on the brand equity.

2. Literature review

Service quality assumed as a key part in accomplishing prominent benefit in market, and quality of common products in itself is not sufficient for retailer organization that has an extensive variety of products/items as its center offerings (Berry, 2016).

Product quality is characterized as the combination of the product that is conveyed by the store (Simonson, 2014; Borle, Boatwright & Kadane et al., 2015). In previous studies, it is demonstrated that product quality play a major role in the product purchase decision, product quality is the key situation instrument which play a huge role on consumer’s purchase intention (Jahanshahi, Gashti, Mirdamadi, Nawaser, & Khaksar, 2011; Shaharudin, Mansor, Hassan, Omar, & Harun, 2011).

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Keller (1993), “the brand equity is the unique and differential impact of the knowledge of the brand on customer’s reaction to the brand marketing”. The strong brand has favorable circumstances while actualizing the marketing strategies (Linda, Stone & Lien, 2012).

Behavioral loyalty believes brand loyalty as an individual behavior. The person who constantly buys a particular brand is loyal and faithful to the specific brand (Odin et al., 2001). The behavioral approach focuses more on outcomes than on motivations or reasons for buying a brand (Jacoby and Kyner, 1973). Brand loyalty is more prominent under the state of positive enthusiastic influence that provoke shoppers to upgrade inspirational approach towards a brand (Basu & Dick, 2004). Many reviews are exactly apparent for brand affect has a critical part to make brand loyalty (Sung & Kim, 2010; Chaudhuri & Holbrook, 2002). Chaudhuri and Holbrook (2001) have shown that brand influence is a strong driver of behavioral loyalty and attitude loyalty. These studies

examine that brand affect as a significant impact on the behavioural and attitudinal loyalty (Matzler et al., 2008, Taylor et al., 2004, Jahangir et al., 2009).

3. Conceptual framework

The present research is quantitative in its approach and follows positivism paradigm. The research design of this study is hypothesis testing, type of investigation is correlational and data collected as cross sectional. The instrument utilized for the collection of data is a structured questionnaire that contained structured and close-ended questions. The questionnaire has two different sections. Section ‘A’ comprising of the demographics such as gender, age, experience, and education. Section ‘B’ is comprised of the questions. All questions in the questionnaire are adapted from previous studies.

Fig. 1: Conceptual model

4. Research methodology

The five point likert scale is used. The scale from 1 (strongly disagree) to 5 (strongly agree). The research for the present study was carried out in Islamabad whereas Smartphone users were taken as respondents to get responses. The unit of analysis for this study is individual which includes the customers of Marriot Hotel Islamabad. For the present study, the time horizon is cross sectional as the data was collected at one point of time from the customers of the Marriot Hotel Islamabad. SPSS 20.0 and AMOS 20.0 were used as a tool to analyze the data and different techniques were used like mean, standard deviations, skewness, kurtosis, correlation, plot box to analyze the data structure.

The structured questionnaire was used as a data acquisition tool. The questionnaire was distributed to the customers of the Marriot Hotel Islamabad. A total of 400 questionnaires were distributed among the participants, of whom 385 were received. When looking closely at the completed questionnaires,

almost 25 were not properly filled, they were not usable. The remaining 360 were usable i.e. they were correctly filled thus the data from these 360 questionnaires was entered into SPSS 20 and AMOS 20, statistical tests used for data analysis. The data collected through questionnaire was coded into SPSS version 20 and AMOS version 20 and a variety of tests were applied in order to analyze data and to test hypothesis. Firstly, the pilot test was conducted using Cronbach’s Alpha for reliability and the internal consistency of instrument.

4.1. Data analysis and results

From the demographics it was noted that the male participants were 75% and female participants were 24%. The most of the people were graduates. The most of the respondents were having a experience of 1-5 years. The demographics show that the data was taken from the educated and suitable people for the research.

Table 1: Descriptive statistics

N Mean Std. Deviation Skewness Kurtosis

PQ 360 29.1472 5.55379 -.843 .129 .394 .256 SQ 360 29.0222 5.65287 -.594 .129 -.167 .256 BE 360 27.8583 6.79992 -.615 .129 -.133 .256 BA 360 35.1417 7.52411 -.490 .129 -.276 .256 AL 360 27.9667 6.04662 -.693 .129 -.118 .256 BL 360 28.0194 5.78945 -.527 .129 -.269 .256

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4.2. Measure validation

The validation of the measurements or the demonstration of the adequacy of the measurements of the study is obligatory before each analysis. According to Ping (2004), measurements must be represented as one-dimensional (with an underlying construction), consistently (corresponding to the model in the analysis of structural equations), reliable (relatively free of measurement errors) , and valid (measuring what they should). In order to determine and evaluate the measurement model for the validity, we have presented the data of the confirmation factor analysis (CFA) with AMOS 20.0 and a maximum likelihood estimate. The CFA results using the sample covariance matrix as input confirmed that each indicator was significantly loaded on its respective underlying concept. The

reliability of the designs was evaluated by Cronbach's Alpha and Composite Reliability (CR) (Fornell & Larcker, 1981). The results showed in Table 4 show that the Cronbach alpha value and the CR of all latent constructions are greater than the recommended value of 0.7.

The convergent validity is identified to the extent that several attempts to measure the same concept are in agreement (Bagozzi & Phillips, 1982).

As shown in Table 2, the size of the standardized load estimates varied from 0.52 to 0.5, and all loads were significant. In addition to these loads, we used the AVE values to demonstrate convergent validity. Also, the magnitudes of the standardized loading estimates ranged from .52 to .85, and all loadings were significant. In addition to these loadings, we used AVE values to demonstrate convergent validity.

Table 2: Reliability and convergent validity (N=360)

Reliability Convergent Validity

Constructs Items Cronbach alpha (α) Coefficients

Composite Reliabilities (CR)

Normed Fit Indices (NFI)

Factor Loadings (min-max)

PQ 4 0.82 0.642 0.99 0.60-0.85 SQ 4 0.77 0.552 0.99 0.52-0.77 BE 4 0.80 0.467 0.98 0.65-0.75 BA 5 0.81 0.382 0.98 0.54-0.80 AL 4 0.81 0.597 0.99 0.67-0.78 BL 4 0.76 0.516 0.99 0.56-0.72

Notes: PQ=Product Quality; SQ= Service Quality; BE= Brand Equity; BA= Brand Affect; AL= Attitudinal Loyalty; BL= Behavioral Loyalty; α = Cronbach’s alpha; CR = Composite reliability; NFI = Normed fit index; CFI

Table 3: Discriminant validity (covariance among latent variables) (N=360)

Constructs PQ SQ BE BA AL BL PQ .80† .08 .15** .13** .12** .10 SQ - .74† .51** .57** .56** .66** BE - - .68† .59** .57** .57** BA - - - .61† .74** .60** AL - - - - .77† .64** BL - - - - - .71†

Notes: PQ=Product Quality; SQ= Service Quality; BE= Brand Equity; BA= Brand Affect; AL= Attitudinal Loyalty; BL= Behavioral Loyalty; ** Correlation significant at 0.01 levels (2-tailed); †√ (AVE) Values in the Diagonal

Discriminant validity was measured by the method suggested by Fornell and Larcker (1981), if the square root of the AVE of a construct is greater than its correlation coefficient with other constructs, then the construct is considered to be different from the other constructs. All the constructs satisfy this condition of discriminant validity as reported in Table 3.

Reliability of the constructs was assessed through Cronbach alpha and Composite Reliability (CR) (Fornell & Larcker, 1981). The results presented in Table 2 show that the alpha value of Cronbach and CR of all latent constructions are greater than the recommended value of 0.7. The results as reported in Table 2 show that the Cronbach alpha value and CR of all the latent constructs are more than the recommended value of 0.7.

Table 4: Nested confirmatory factor analysis (N=360)

Initial Fit Indices Modifications Final Fit Indices

Nested Model

χ2 553.68 Items Removed χ2 553.68 df 260 None df 260

χ2 / df 2.13 χ2 / df 2.13 GFI 0.89 Covariance GFI 0.89 NFI 0.87 None 0.87 0.87 CFI 0.92 0.92 0.92

RMSEA 0.05 0.05 0.05

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Fig. 2: Nested CFA

Fig. 3: Direct effect model

Fig. 4: Indirect effect model

Table 5: Results of structural equation analysis for two competing models (N=360)

The relationships between variables Direct effect model Indirect effect model

β S.E β S.E

BE→ BA Not applicable 0.79 0.07** Significant

PQ→ BE 0.06 0.68 Insignificant 0.09 0.06 Insignificant

SQ→BE 0.72 0.08** Significant 0.78 0.08** Significant

BE→ AL 0.41 0.05** Significant 0.24 0.09** Significant

BE→ BL 0.69 0.06** Significant 0.57 0.09** Significant

χ2 802.83 618.50

Df 267 266

χ2 / df ratio 3.00 2.32

GFI 0.86 0.87

NFI 0.81 0.85

CFI 0.86 0.91

RSMEA 0.07 0.06

R² MIW 0.54 0.64

R² EE 0.79 0.84

R² CP 0.66 0.77

Notes: ***p < 0.001; * *p <0.05

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Table 6 Recommence of Hypotheses

Hypotheses Results

H1 Product quality has a significant positive effect on brand equity Rejected

H2 Service quality has a significant positive effect on brand equity Accepted

H3 Brand equity has a significant positive effect on attitudinal loyalty Accepted

H4 Brand equity has a significant positive effect on behavioral loyalty Accepted H5 Brand affect mediates the relationship between brand equity and attitudinal loyalty Accepted

H6 Brand affect mediates the relationship between brand equity and behavioral loyalty Accepted

We fitted two structural models (direct and indirect effect models) to test the hypotheses. In order to evaluate the fit of the two structural models numerous goodness-of-fit indices were used as suggested in the SEM literature e.g. (Bentler, 1992; Hu & Bentler, 1999; Marsh, Balla, & McDonald, 1988; Ping, 2004; Sila & Ebrahimpour, 2005; Venkatraman, 1989)such as χ2 / df; GFI, NFI, CFI, and RMSEA.

In direct-effect model we estimated the direct path from PQ and SQ to BE and BE to AL and BL. In this model, no path stems from BA to AL and BL (mediator variable). In an indirect model, we connected the path between BA to AL and BL, this procedure to test mediation was based on a guidelines provided by Shrout and Bolger (2002) for testing mediation in SEM.

5. Discussion and conclusion

In this article, the Quality-Equity-Loyalty framework has been used (Parasuraman & Grewal, 2000). The Model 1 of this article focused on to investigate and measure the impact of the quality of product or services on the brand equity in the context of hospitality industry. We find that there is a strong positive impact of the service quality on the brand equity. The brand equity increases due to the positive increase in the quality of the service of the hotel. On the other hand, we found that in the context of Pakistan the product quality has insignificant impact on the brand equity. In the context of Pakistan, Islamabad, people are more concerned with the service quality of the hotels rather than the product quality. In examination of the model 2, we come up with the results that there is a partial mediation of brand affect between brand equity and attitudinal loyalty and a very strong mediating role of the brand affect between brand equity and behavioral loyalty. The above results of the mode l 2 shows that the there is a very weak mediating role of the brand affect between brand equity and attitudinal loyalty.

This study shows that in the hotels the people are more conscious for the quality of services provided by the hotel management. The increase in the service quality of the hotel management will increase the revisit intention of the customers, customers will be highly influenced due to the service quality of the hotel and if the service quality is positive the brand equity will also increase.

There is a strong relationship of brand equity with attitudinal loyalty. The increase in the brand

equity will increase the attitudinal loyalty of the consumer. There is a partial mediation of brand effect between the brand equity and the attitudinal loyalty. On the other hand, the brand affect plays a very strong mediating role between brand equity and behavioral loyalty. However, the direct impact of brand equity on behavioral loyalty is also very strong.

5.1. Managerial implications, limitations and future suggestions

To increase the brand equity of the hotels, the hotels are highly required to increase the service quality of the hotel management, the positive increase in the quality of the services the brand equity of the hotel will also increase. Managers need to pay a lot of focus towards the service and the staff behavior of the hotel. By using the above results of the research, the managers can come up with the better strategies by keeping the results in mind. The managers can make the customer loyal and increase the number of loyal customers by increasing the brand equity.

This study has been conducted in the context of a Pakistan, Islamabad and so the results could be different in the different area of the Pakistan or world. The study has many limitations, due to the time constraints, the study covered the area of Islamabad the study could be conducted within the different cities of Pakistan to come up with the better and more reliable results. The research is quantitative and the data is cross-sectional. The future study could be conducted by using the combination of the qualitative and quantitative methods. The observation of the behavior of the individuals will lead towards the better results because the questionnaires could be biased but observation of the behavior of the individuals will give more accurate results. The future research can study the mediating role of the customer involvement between the brand equity and the customer loyalty.

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