factors affecting the brand decline and ways of coping with it

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Factors affecting the brand decline and ways of coping

with it Amin Faramarzi pour M.A student of Marketing Management,

Department of Management, Kish International

Campus, University of Tehran, Kish Island, Iran

Dr Mohammad Haghighi

Associate Professor, Department of Business

Administration,University of Tehran,

Abstract: This study seeks to identify the factors affecting the brand decline in Persian Caviar

Company. Therefore, the information of 150 consumers, who used the caviar products, is collected

and analyzed using the exploratory factor analysis, confirmatory factor analysis and structural

equations. The research results indicate that the high prices, poor quality and competitive activity

are among the factors which have positive impact on the brand decline. It is also found that the

appropriate marketing can prevent the brand decline. Based on the obtained results, there is no

significant correlation between the way of packaging and the rate of access with the brand decline.

Keywords: Brand decline, Persian Caviar Company, structural equations, marketing

1- Introduction

The research on consumer behavior investigates the attitude, way of selection, purchase,

use and consumption of goods, service, ideas and experiences by individuals, groups and

organizations to meet their needs and desires. It is not simple to understand the consumer

behavior. The customers may express their needs and desires in a way, but act differently.

They may be unaware of their inner deeper motivations or react to effective factors which

change their opinion at the last moment. However, the marketers should investigate their

customers' demands, subjective and buying perceptions, and their buying behavior. The

marketers should know the mental effects of market brands on the consumers' behavior

and attitudes as well as how the customers make decisions about buying a certain brand in

order to achieve the success (Ismail et al, 2006) because the customers select the products

with regard to their knowledge about various brands; on the other hand, the producer seek

to build the loyalty in their customers to their brands (Esen Gurbuz, 2008).

A brand will become successful if the brand managers have a proper understanding of its

constituting assets. Building the motivation in customers to involve them in strengthening

and developing a brand is a way which leads to the greater efficiency and effectiveness. The

customer engagement and involvement in works, product or service differentiation, and

admiring the people instead of inciting them to buy, and giving the reward for purchasing a

product all lead to the customer participation in building and strengthening a brand

(Anderson et al, 1997). The current era contains the accelerating and unpredictable

changes, and the companies are faced with the toughest competitive situations, which have

never experiences before, due to the factors such as the uncertain boundaries between

markets, fragmentation of markets, shorter product life cycle, rapid change in customer

buying models, and more aware and knowledgeable customers (Wong and Shoal, 2002). The

brand maintenance and development is one of the perennial measures of companies, but

Factors affecting the brand decline and ways of coping with it

Faramarzi pour/ Argos Special Issue 2015/pp.1-14

some of the top brands have been removed or weakened in various markets of Iran in recent

years. This condition is certainly due to numerous reasons and we should think about the

revival of brand.

Conducting the various studies and benchmarking other countries and investigating the

way of dealing with the brand crises and overcoming them or reviving the brand, the

researchers and consultants in marketing park of Iran have achieved the results and gave

these localized factors to consulted companies and these companies have been able to

control most of the damages to brands as a result of internal factors (e.g. advertising,

production, marketing, etc.) and external factors (e.g. customers, political, social, economic,

and environmental factors, etc.) with respect to these components. However, the brand

revival is a difficult process which treats the brand and is cost and time consuming. The

prevention of brand decline is the proposed solution by the consultants in marketing park of

Iran; and three issues, namely, the consumer recognition, creating the differentiation and

innovation, and re-position of brand in minds customers' minds, should be investigated for

reviving the brand in the case of weakness in brand. The brands are always influenced by a

combination of internal and external environmental factors including the weak advertising

and marketing, economic stability of company and customers (Moven, 2007). Nowadays,

due to the importance of brand concept in customers' purchase, some of the experts have

considered is as a full product and believe that the customers often buy the brands instead

of products.

The preparation and consumption of caviar has the historical roots, and there are even the

signs of carrying the sturgeons after salting from the Caspian Sea in Iran to Ekbatan.

Caviar is one of the most important export products in the fishery sector. According to the

statistics, the caviar production has been declining over the last twenty years. Due to the

disturbed catching conditions and caviar production in the Caspian Sea after the collapse of

the Soviet Union and the intensification of its decline because of the excessive catching and

fishing by the newly independent countries, the discussion of producing the farmed

sturgeon was raised and the successful research and pilot practices were conducted in 2010,

but none of those successes were as much as the several hundred percent of reduction in

Iranian caviar. In the case of continued such this situation, the sturgeon will become

extinct in the near future. Currently, ninety percent of the world's sturgeon is living in the

Caspian Sea and they have a negative population growth and are highly exposed to the

extinction. Four hundred tons of caviar is demanded in the world annually, but due to the

disturbed ecosystem of the Caspian Sea, its global production does not exceed one hundred

and twenty tons.

Therefore, it is important to identify the factors affecting the decline of caviar industry. An

overview of changes in the manufacture and export of caviar in recent years indicates the

turmoil of current situation in this industry. Due to the reduced supplies of caviar in recent

years, the Convention on International Trade sought to ration catching the sturgeon and

exporting the caviar from the Caspian Sea in 1998 for the endangered species of the United

Nations (Sites). Thus, the importance of understanding the factors affecting the specific

features of this industry has been increased and it is essential to conduct a variety of

studies in this field. The study is conducted with the aim at investigating the causes and

factors affecting the decline of caviar industry.



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2- Brand

The brands may have the short or long life time; the circumstances may be created in

the market under which a company cannot maintain its brand. When a brand cannot be

revived any longer, the best way is to exclude it from the market. The companies should

evaluate the health of their brands considering the changing economic conditions. The

life of a brand can be increased in the case of taking special measures. According to the

responsibility of any company, it should identify at what stages of life cycle its brand(s)

are and whether they can be revived or not. According to the marketing managers'

current problems, their efforts to create and maintain the brand have been without

planning, and because of the lack of knowledge about the features of brand and the

proper methods of brand management, they cannot effectively link the product with a

brand. (Herremans, 2000) According to Hamidi, the features of a successful brand are

the superior quality, consistency with consumer needs, and the high competition with

domestic and foreign competitors' products, but according to the leading causes of brand

quick decline and death, the companies have only introduced themselves as the valuable

brands through the advertising instead of planning or have not continued these efforts,

which are often too costly, after introduction as a brand. Furthermore, the loss of ability

to compete with domestic competitors or export products as the result of instability in

the local major decisions is among the reasons for the death of a brand. There are

numerous dangers for a brand decline; some of them are as follows: (Hamidi, 2013).

1. Using the strong advertising;

2. The lack of precise understanding of consumer and actor's expectations and

taking the measures based on our perceptions and imagination;

3. Emphasis on the competitive and normal aspects;

4. Selecting the items which are unimportant to consumers and will not lead us to

win in a competition.

5. The failure to prove an important benefit and assuming it approved

Aaker has summed up the brand equity in five dimensions: The brand loyalty,

awareness, associations, perceived quality and other exclusive assets of brand. Claire

has discussed the brand equity (brand knowledge) in the form of brand image and

awareness. Both authors have emphasized on the similar aspects; both have focused on

the importance of brand awareness and have raised it as the hypothesis of creating the

strong brand. The quality dimension is discussed in both definitions, but Aaker has

explicitly discussed it. Claire has considered the perceived quality as a component of

brand image, and discussed it in the form of benefits and features and at a more

abstract level (Seyed-Javadin and Shams, 2007). The dimensions of image or brand

associations are seen in both definitions, but Claire's definition of brand image is

broader, so that according to his definition, the brand image includes all "customer

brand perception which is reflected through the associations that are created in his

mind". The brand loyalty is one of the differences between these two definitions. As

Aaker has considered the brand loyalty as a factor for determining the brand equity,

Claire has taken into account it as one of the consequences of strong brand and brand

assets (Anselmsson, 2007). According to another definition, the brand equity is defined

as the customer loyalty and brand image. According to Farquhar (1989), the brand

equity is the incremental benefit or value added which is added to product through the

brand name (Smith, 2007).



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3- Research methodology

This study is applied in terms of objective and has the survey type according to the data

collection method. It is correlative in terms of data collection and is done through the

structural equation modeling (path analysis). The library and survey methods are

utilized for data collection, so that the library method is used in the theoretical section

for designing the questionnaire, and the field method (questionnaire) is applied for data

collection. The statistical population of research consists of all consumers who consumed

the products of Persian Caviar Company. The sampling has cluster and random method

and the samples are selected by visiting the caviar dealerships in Tehran City. The

minimum sample size is equal to 150 according to Morgan Table. 10 caviar dealerships

are studied in Tehran.

This study applies the descriptive and inferential statistics to analyze data, so that

each variable is initially described through SPSS software in tables, graphs and as the

statistical indices, and then the structural equation modeling, Chi-square test, SPSS

and LISREL software are utilized for data analysis, hypothesis test, and generalization

of results from sample to statistical population. The research model is estimated

according to Figure 1:

Figure 1- Conceptual model of research

4- Research Findings

4-1- Exploratory factor analysis of factors affecting the brand decline

Different measurement tools including the exogenous factors are utilized to assess the

factors affecting the brand decline. On this basis, a set of 22 items are extracted and

written as a part of research questionnaire. Afterwards, the exploratory factor analysis

is performed on all variables through SPSS software, and then the results of exploratory

factor analysis are described on the factors influencing the brand decline.



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The sampling adequacy should be examined to confirm whether the set of research data

is appropriate for factor analysis or not. Kaiser-Meyer-Olkin (KMO) index or Bartlett's

test can be applied in this regard. To approve the sampling adequacy, the KMO index

should be higher than 0.6 or the Bartlett's test should be significant. The results of

KMO-Bartlett test are presented in Table 1. According to the results, the stages of

exploratory factor analysis can be conducted on the data. The amount of KMO index

confirms the sampling adequacy and the confidence level of zero for Bartlett's test also

indicates the suitability of factor model.

Table 1- Results of KMO-Bartlett for factors affecting the brand decline

Kaiser-Meyer-Olkin (KMO) index 0.773

Bartlett's test

Chi-square statistic 4617.060

Degree of freedom 231

Significance level 0.000

At the next stage, we should identify the number of latent factors. Therefore, the Table 2

indicates the results of determining the number of latent factors based on the

eigenvalues. The column of eigenvalues indicates six factors with eigenvalues greater

than 1, thus the proposed factor structure will have 6 factors which explain about

88.809% of variance and this is a reasonable amount.

Table 2- The total explained variance for factors affecting the brand decline

Factor Eigenvalues

Total Percentage of explaining the

variance

Percentage of explaining the

cumulative variance

1 10.514 47.790 47.790

2 3.653 16.604 64.394

3 2.249 10.222 74.616

4 1.357 6.166 80.783

5 1.107 5.033 85.815

6 1.059 2.993 88.809

The Scree Plot is another way of determining the number of latent factors and it is

shown in the following figure. This plot also indicates the presence of 6 latent factors

which are defined according to horizontal axis in terms of the fracture site.



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Figure 2- Scree plot for determining the number of latent factors affecting the brand decline

The final structure of factors is presented in rotated matrix. Table 3 shows a matrix

which contains the proportion of variable variance explained by factors. The rotated

factor matrix could put the variables in 6 factors. The results of this matrix are the

bases for grouping the variables, and thus a number of variables, which have high factor

loadings (greater than 0.7), are allocated to each factor.

Table 3- Matrix of factor loadings after rotation of factors affecting the brand decline

Item Factors

Marketing Rate of access

Low quality Competitors' activities

Packaging method

High price

s1 0.140 0.402 0.326 0.173 0.186 0.768

s2 0.166 0.404 0.331 0.156 0.235 0.756

s3 0.155 0.387 0.331 0.192 0.188 0.754

s4 0.907 0.087 0.091 0.153 0.067 0.051

s5 0.884 0.079 0.130 0.128 0.112 0.058

s6 0.867 0.091 0.037 0.062 0.188 0.087

s7 0.911 0.099 0.088 0.129 0.071 0.096

s8 0.898 0.128 0.077 0.144 0.141 0.128

s9 0.880 0.115 0.150 0.172 0.144 0.043

s10 0.907 0.088 0.111 0.184 0.119 0.059

s11 0.129 0.910 0.091 0.058 0.043 0.191

s12 0.138 0.873 0.100 0.085 0.079 0.230

s13 0.152 0.900 0.123 0.156 0.048 0.184



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Item Factors

Marketing Rate of access

Low quality Competitors' activities

Packaging method

High price

s14 0.279 0.125 0.280 0.805 0.249 0.114

s15 0.255 0.134 0.208 0.848 0.236 0.188

s16 0.268 0.128 0.216 0.849 0.238 0.114

s17 0.144 0.142 0.873 0.244 0.174 0.246

s18 0.156 0.106 0.863 0.227 0.148 0.215

s19 0.152 0.128 0.903 0.158 0.189 0.182

s20 0.306 0.081 0.214 0.237 0.824 0.062

s21 0.286 0.077 0.148 0.209 0.871 0.081

s22 0.045 0.051 0.148 0.188 0.725 0.275

The appropriate factor loadings indicate the proportion of factor structure, and they do

not induce the need to remove any item in this questionnaire. Based on the distributed

variables in each factor and according to the available theoretical literature and the

concept of items, the six factors are called the marketing, rate of access, low quality,

competitors' activities, packaging method, and high price.

4-2- Confirmatory factor analysis of factors affecting the brand decline

Despite the fact that the exploratory factor analysis of structure for the factors affecting the

brand decline proposes the factor structure with 6 factors for this structure, it is better

to conduct the confirmatory factor analysis by measurement model in LISREL software

in order to ensure that the factor structure is fitted with collected data, and also the

adjustments should be made on the model in order to connect these factors with

dependent variable with the least possible difficulty at the next stages of testing. Table 4

shows the English symbols of variables applied in enablers of service agility.

Table 4- Symbols of factors affecting the brand decline

Variable Applied symbol in model

Rate of access Access

Low quality Quality

Competitors' activities Activity

Packaging method Packaging

Marketing Marketing

High price Price

The model indices are shown in Table 5. These indices should range from 0 to 1, and the

closer to 1, the more appropriate model. The amounts of these indices are appropriate in

this study. Therefore, the model is also acceptable in this regard. Given that the indices

of model fit indicate the goodness of fit, it can be concluded that an appropriate model is



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estimated. Therefore, the model has desirable proportion to collected data. Thus, the fit

of final model is approved for measuring the factors affecting the brand decline.

Table 5: The values of model fit for the factors affecting the brand decline

Indices Index Value

Comparative fit index CFI 0.92

Incremental fit index IFI 0.92

Goodness of fit index GFI 0.90

Adjusted goodness of fit index AGFI 0.90

Bonett- Bentler index or normed fit index (NFI) NFI 0.90

Figure 3- Factor loadings for the factor affecting the brand decline

The output results of LISREL software for fitting the factors influencing the brand

decline are shown in Figure 3. According to the Figure 3, it can be concluded that the

factor loadings for all observed variables are above 0.8 which indicates the goodness of

these values. In other words, it can be concluded that the observed variables in the



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model can appropriately explain the relevant variables. Furthermore, Figure 4 shows

the t-test of significant loadings for the factors influencing the brand decline as well as

the significance of all factor loading coefficients (the observed value is higher than the

critical value of t statistic (1.96)). Furthermore, LISREL software also shows the non-

significant relations in red at the output.

In addition to estimation of coefficients and errors in the model, LISREL software

provides a series of proportion indices by which the overall fit of model can be tested as

follows. RMSEA index is one of the most important indices in the structural equations.

According to the overall view, if this index is less than 0.1, the model has excellent fit. If

it is from 0.1 to 0.5, the model fit is good, and if from 0.5 to 0.8, the model fit is medium.

Based on the output of LISREL software (Figure 4), the RMSEA index is equal to 0.077.

According to the above-mentioned cases, it can be concluded that the model has

excellent fit. Furthermore, the normed Chi-square index is one of the general indices for

calculating the free parameters in measuring the fit indices and it is obtained through

dividing the Chi-square by degree of freedom in model. If this value is from 1 to 5, it is

favorable. Based on the output of software, this index is obtained equal to 3.23 which is

also a good value.

Figure 4- Significant of factor loadings for the factors influencing the brand decline



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4-3- Investigating the reliability of factors affecting the brand decline

Cronbach's alpha coefficient is utilized in this section for confirming the internal

consistency of factors affecting the brand decline. If the obtained Cronbach's alpha

coefficient is greater than 0.7, it indicates the acceptable reliability of questionnaire.

According to the obtained value of Cronbach's alpha coefficient for the total

questionnaire and each factor, it can be concluded that the obtained value is greater

than 0.7 indicating the desired reliability of questionnaire (Table 6).

Table 6- Cronbach's alpha for the factors affecting the brand decline

Questionnaire Number of items Cronbach's alpha coefficient

Access 3 0.970

Low quality 3 0.935

Competitors' activities 3 0.955

Packaging method 3 0.964

Marketing 7 0.972

High price 3 0.780

4-4- Inferential findings

The conceptual model of research is fitted in order to investigate the research questions.

The research model is examined for goodness of fit through LISREL software and the

path chart in order to ensure the goodness of fit with collected data. The results of

fitting the conceptual model of research are presented in Figure 5 and the significant

coefficients in Figure 6.

According to the output of LISREL software in Figure 5, the RMSEA index is equal to

0.079. According to above-mentioned cases, it can be concluded that the model has the

excellent fit. Furthermore, the normal Chi-square is also obtained equal to 4.49 and this

is suitable. The model indices are shown in Table 7. Based on the above-mentioned

cases, the values of these indices are suitable in this research. Therefore, the model is

also acceptable in this regard. Given that the indices of model fit indicate the good

fitness, it can be concluded that an appropriate model is estimated. Therefore, we can

investigate the coefficients of research variables and questions.

Table 7- Values of model fit indices for the factors affecting the brand decline

Indices Index Value

Comparative fit index CFI 0.87

Incremental fit index IFI 0.92

Goodness of fit index GFI 0.90

Adjusted goodness of fit index AGFI 0.90

Bonett- Bentler index or normed fit index (NFI)

NFI 0.91



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Figure 5- Standardized coefficients of structural equations

Sub-question 1: Is there a significant correlation between the brand decline and the

price level in Parsian Gas Refining Company?

To investigate the question above and according to the Figure 5, it can be concluded that

the price has an impact of 0.43 on the brand decline in Parsian Gas Refining Company.

According to the t-statistic of this coefficient in Figure 6, it can be argued that the

obtained coefficient is statistically significant (The obtained t statistic is higher than the

critical value of 1.96).


quality level in Parsian Gas Refining Company?


the quality has an impact of 0.38 on the brand decline in Parsian Gas Refining

Company. According to the t-statistic of this coefficient in Figure 6, it can be argued that

the obtained coefficient is statistically significant (The obtained t statistic is higher than

the critical value of 1.96).



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Figure 6- Significance of structural equation coefficients

Sub-question 3: Is there a significant correlation between the brand decline and the rate

of access in Parsian Gas Refining Company?


the access rate has an impact of 0.01 on the brand decline in Parsian Gas Refining


the obtained coefficient is not statistically significant (The obtained t statistic is lower

than the critical value of 1.96).


packaging method in Parsian Gas Refining Company?


the packaging method has an impact of 0.08 on the brand decline in Parsian Gas

Refining Company. According to the t-statistic of this coefficient in Figure 6, it can be

argued that the obtained coefficient is not statistically significant (The obtained t

statistic is lower than the critical value of 1.96).

Sub-question 5: Is there a significant correlation between the brand decline and

marketing method in Parsian Gas Refining Company?


the marketing has an impact of -0.43 on the brand decline in Parsian Gas Refining




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the obtained coefficient is statistically significant (The obtained t statistic is higher than

the critical value of 1.96).


competitors' activities in Parsian Gas Refining Company?


the competitors' activities have an impact of 0.35 on the brand decline in Parsian Gas

Refining Company. According to the t-statistic of this coefficient in Figure 6, it can be

argued that the obtained coefficient is statistically significant (The obtained t statistic is

higher than the critical value of 1.96).

5- Summary and Conclusion

Based on the theoretical literature, we have identified the factors which could affect the

decline in Parsian Gas Refining Company and then investigated them using the

exploratory and confirmatory factor analysis techniques. On this basis, these factors are

called the marketing, access rate, low quality, competitors' activities, packaging method,

and the high price.

In general, the following suggestions are offered according to the research literature,

applied methodology, analysis of collected data, and conclusions in the form of structural

model:

It is suggested that the managers in Parsian Gas Refining Company should

make the prices of products compatible with the purchasing power in caviar

consumers in order to survive in the industry and sell the caviar products.


improve the quality of their products in order to prevent the market decline, so

that they will be able to retain their customers by improving the quality and

prevent the brand decline by attracting the new and satisfied customers and

making them loyal.


perform the appropriate marketing in order to prevent the brand decline. For

instance, they can change and improve the rate and method of marketing by

making the changes in the product to meet the customer demands, use the

customer opinion about the product, give the necessary and sufficient

information about the products, and use the new marketing techniques.


consider the competitors' activities in order to prevent the brand decline and take

into account different factors such as the quality, price, customer orientation, and

marketing, etc in order to compete with other companies, and prevent the brand

decline by improving the shortcomings and utilizing the proper principles of

competition.

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