Tài liệu Testing a model of customer - based brand equity in the vietnamese banking service

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY Lâm Hồng Phong Testing a Model of CUSTOMER-BASED BRAND EQUITY In The Vietnamese Banking Service MASTER’S THESIS In Business Administration Ology code: 60.34.05 Supervisor Dr. Trần Hà Minh Quân Ho Chi Minh City 2009 Acknowledgement This research project would not have been possible without the support of many people. Firstly I wish to express my deep sincere gratitude to my supervisor, Dr. Tran Ha Minh Quan for his invaluable advices and helps. Without him, this thesis could not have been completed. Special thanks to all instructors without whose knowledge and assistance this study would not have been successful. My debt is also acknowledged to Dr. Barry Clough from Dragon-Mekong-CTU for his kindness and help in English editing. I would like to express my deepest gratitude and honor to my dear parents for not only the love they devote to me but also for the time I took from them which should have been my devotion to them in their aged time. My thanks would also go to all of my classmates, my colleagues, especially my “old pals”, Nguyen Thanh Trung and Ms Dang Hai Yen for all of their friendship and encouragement. I also wish to thank my friends in Vietcombank, VPBank, Navibank and Tien Phong bank for their great support. My thanks would also go to the respondents, without them, my thesis could not have been done. Finally, my greatest thanks would go to my dear wife, Vu Thi Thuy Duong and my two sons, Vu and Phuc who are my whole life and are the greatest inspiration and encouragement for me to overcome all difficulties through the duration of my study. i Abstract This study reports on the research results by testing the model of customerbased brand equity proposed by Martensen & Grønholdt (2004) into banking industry of Vietnam. A study of 295 respondents from two bank brands was conducted in Can Tho city. Multiple linear regression technique was used to test the hypotheses and research model. According to the results, the original model was applicable in Vietnamese retail banking service with some adaptation. Service quality and price were confirmed to have positive impacts on both rational and emotional evaluations. However, the other associations such as brand differentiation, brand promise and trust and credibility were found significant in relation with only either rational evaluation or emotional evaluation. The different weights of the relationships between brand associations and brand evaluations, and between brand evaluations and customer-brand relationships, have some implications for bank managers who might use them as a source of reference for CRM strategy. The study also provided a modified model of customer-based brand equity that could be used as a point of departure for those who would like to conduct a further research into brand equity in banking industry in Vietnam. Key word: banking, customer-based brand equity, customer-brand relationship ii TABLE OF CONTENT Acknowledgement.............................................................................................................i Abstract ............................................................................................................................ii TABLE OF CONTENT ................................................................................................. iii LIST OF FIGURES..........................................................................................................v Chapter 1: INTRODUCTION..........................................................................................1 1.1 Introduction ............................................................................................................1 1.2 Research background..............................................................................................1 1.3 Problem statement .................................................................................................2 1.4 Research objective..................................................................................................3 1.5 Scope and methodology of the study .....................................................................4 1.5.1 Scope of the study............................................................................................4 1.5.2 Research Method .............................................................................................5 1.6 Structure of the study..............................................................................................5 Chapter 2: LITERATURE REVIEW...............................................................................7 2.1 Introduction ............................................................................................................7 2.2 A brand versus a product........................................................................................7 2.3 Brand equity .........................................................................................................11 2.3.1 Brand associations .........................................................................................13 2.3.2 Brand evaluations .........................................................................................19 2.3.3 Customer-brand relationship .........................................................................22 2.4 Generation of hypotheses .....................................................................................24 2.5 Conclusion ............................................................................................................25 Chapter 3: METHODOLOGY.......................................................................................27 3.1. Introduction .....................................................................................................27 3.2. Business research ............................................................................................27 3.3. Research design ...............................................................................................28 3.4. Item generation................................................................................................29 3.4.1 Scale to measure rational associations..........................................................29 Scale to measure price. ...............................................................................................31 3.4.2 Scale to measure rational and emotional associations..................................32 Scale to measure brand promise. ................................................................................32 3.4.3 Scale to measure brand evaluations..............................................................32 3.4.4 Scale to measure customer- brand relationship ............................................33 3.5. Pilot test ...........................................................................................................33 3.6. Main survey.....................................................................................................34 3.6.1 Brand selection .............................................................................................35 iii 3.6.2 Sampling ......................................................................................................35 3.6.3 Sample size ...................................................................................................36 3.7. Conclusion.......................................................................................................36 Chapter 4: DATA ANALYSIS AND FINDINGS........................................................38 4.1 Introduction ..........................................................................................................38 4.2. Descriptions of sample ........................................................................................38 4.3. Scales assessment ................................................................................................40 4.3.1 Reliability testing...........................................................................................40 4.3.2 Exploratory factor analysis ............................................................................42 4.4 Testing the research model and the hypotheses ...................................................46 4.4.1 Testing correlations between all constructs .............................................46 4.4.2 Testing research model ............................................................................46 4.5 Findings and conclusion..................................................................................56 4.5.1 Findings .........................................................................................................56 4.5.2 Conclusion .....................................................................................................58 Chapter 5: CONCLUSIONS AND IMPLICATIONS.....................................................................59 5.1 Introduction ..........................................................................................................59 5.2 Conclusions of the study ......................................................................................59 5.2.1 Summary of all hypotheses............................................................................59 5.2.2 Conclusions of the study................................................................................60 5.3 Implications of the study ......................................................................................61 5.3.1 Theoretical implications ................................................................................61 5.3.2 Practical implications.....................................................................................62 5.4 Limitations and recommendations for further research .......................................63 List of References ..........................................................................................................65 Appendix 1 – Questionnaire (Vietnamese version) .......................................................68 Appendix 2 – Observed variables ..................................................................................71 Appendix 3 - Descriptive Statistics of variables............................................................73 iv LIST OF FIGURES FIGURE 1.1. OUTLINE OF CHAPTER 1 ................................................................................1 FIGURE 1.2. STRUCTURE OF THE STUDY ...........................................................................6 FIGURE 2.1. THE STRUCTURE OF CHAPTER 2....................................................................7 FIGURE 2.2. A BRAND VERSUS A PRODUCT .......................................................................9 FIGURE 2.3 ORIGINAL MODEL OF CUSTOMER–BASED BRAND EQUITY .........................14 FIGURE 2.4. RESEARCH MODEL OF CUSTOMER-BASED BRAND EQUITY ......................26 FIGURE 3.1. OUTLINE OF CHAPTER 3 ..............................................................................27 FIGURE 3.2. RESEARCH PROCESS ....................................................................................30 FIGURE 4.1. OUTLINE OF CHAPTER 3 ..............................................................................38 FIGURE 4.2. AGE GROUPS OF RESPONDENTS ..................................................................39 FIGURE 4.3 FREQUENCY OF TRANSACTIONS ..................................................................40 FIGURE 4.4. RELATIONSHIPS BETWEEN RATIONAL EVALUATION AND THE BRAND ASSOCIATIONS ..............................................................................47 FIGURE 4.5. RESULTS OF MODEL I ..................................................................................50 FIGURE 4.6. RELATIONSHIPS BETWEEN EMOTIONAL EVALUATION AND THE BRAND ASSOCIATIONS ..............................................................................51 FIGURE 4.7. RESULTS OF MODEL II ................................................................................53 FIGURE 4.8A – HYPOTHESIS 11 TESTING RESULT ...........................................................54 FIGURE 4.8B. RESULTS OF MODEL III B ..........................................................................55 FIGURE 4.9. ADJUSTED MODEL OF CBBE IN BANKING SERVICE ...................................58 FIGURE 5.1 – OUTLINE OF CHAPTER 5 ............................................................................59 v LIST OF TABLES TABLE 4.1 – SAMPLE CHARACTERISTICS ........................................................................39 TABLE 4.2 – RELIABILITY OF THE MEASUREMENT INSTRUMENT....................................41 TABLE 4.3 – ROTATED COMPONENT MATRIX .................................................................44 TABLE 4.4 – EFA RESULT FOR INDIVIDUAL MEASUREMENT SCALES .............................45 TABLE 4.5 – CORRELATION MATRIX...............................................................................48 TABLE 4.5A. MODEL SUMMARY .....................................................................................49 TABLE 4.5B – COEFFICIENTS A ........................................................................................49 TABLE 4.6 – SUMMARY OF HYPOTHESES TESTING RESULTS (MODEL I).........................50 TABLE 4.6A - MODEL II SUMMARY ...............................................................................51 TABLE 4.6B - COEFFICIENTSA .........................................................................................52 TABLE 4.7 – SUMMARY OF HYPOTHESES TESTING RESULTS (MODEL II)........................52 TABLE 4.7A - MODEL III A SUMMARY ...........................................................................53 TABLE 4.7B - COEFFICIENTSA .........................................................................................54 TABLE 4.8A - MODEL III B SUMMARY ...........................................................................55 TABLE 4.8B – COEFFICIENTS A ........................................................................................55 TABLE 4.9 – SUMMARY OF HYPOTHESES TESTING RESULTS (MODEL IIIA,B).................56 TABLE 5.1. SUMMARY OF HYPOTHESES..........................................................................60 vi Chapter 1: INTRODUCTION 1.1 Introduction This chapter portrays general introduction for the current study with which research problem, research objectives and research questions are provided as the rationale for this study. An introduction to the methodology to be used and the scope of the study is also addressed in this chapter. At the end of the chapter, the structure of this study is provided. The Outline of this chapter is shown in figure 1.1 Figure 1.1. Outline of chapter 1 1.1 Introduction 1.2 Research background 1.3 Problem statement 1.4 Research objectives 1.5 Scope and Methodology 1.6 Structure of the study 1.2 Research background In a more globalized and integrated economy with increasing deregulation, competition in the banking industry become significantly fiercer. Research into less successful financial brands shows that inadequate support for the brand and, confusion and lack of understanding of branding are two important factors that constrain the success of these brands (Chernatony and Cottam, 2006). For banks today, the strength and marketing power of an institution’s brand is 1 rapidly becoming one of the critical levers for differentiation and hence competitive advantages. Without doubt, a good brand increases value for a particular product or service, and thus it is called brand equity. In marketing literature, brand equity is defined and measured differently. Brand equity is either conceptualized or measured, or both. Despite the fact that there are different conceptions about brand equity, however, there are two major viewpoints from which to consider brand equity: the financial perspective and customer-based perspective. Financial perspectives focus on the financial outcome for the firm (Taylor et al, 2005), for example, by using certain techniques to extract the brand equity’s value from the intangible value of the firm. The other perspective focuses largely on the knowledge and relations that customers have with the brand (Aaker, 1991; Keller, 1993, 2001). Compared to the former perspective, the later is more fruitful in marketing literature. Despite the important role of brand equity, however, much attention and efforts are devoted to the brand equity in goods marketing, while research into its contribution to service, especially in banking industry, is very limited. Recent years have seen a significant and rapid growth of the banking industry in Vietnam, especially in the growth of the Vietnamese commercial join stock banks. This trend opens up abundant choices for the customer, but also banks with fierce competition, so banks now face the crucial problem of customer switch. In this circumstance, the disadvantage of Vietnamese banks is apparently not only weakness in financial strength, technology, diversification of products and services, but also insufficient attention in branding. Branding strategy is one of the most critical weaknesses of Vietnamese banks (Tap Chi Ke Toan, 2007). 1.3 Problem statement Building a strong brand with significant (brand) equity is seen as providing a host of 2 possible benefits to a firm, including greater customer loyalty (Keller, 2001). Brand equity is one of the most important marketing concepts and has been an area of interest for marketing academics and practitioners as well. There are a numbers of models of brand equity in common marketing settings (Farquhar,1989; David A. Aaker, 1991; Kevin L. Keller, 1993, 2001; Ambler et al, 2002; Netemeyer et al, 2004; Martesen and Grønholdt, 2004) or in financial service perspectives (Taylor et al, 2005). However, to my best knowledge, there is no model of brand equity that particularly focuses on banking service. It might be worthwhile and necessary to build a brand equity model in banking service. Brand equity in banking service deserves elaboration in some regards. “ First and foremost, unlike other financial firms, banks act as intermediaries between borrowers and lenders and, in so doing, they offer a unique form of asset transformation” (Shelagh Heffernan, 2005). Bank transactions usually involve a large sum of money and hence, trust and price (in terms of interest rates…) appear to be critical matters in the industry. Second, bank transactions, especially lending, are more complicated than transactions for other products and services. For example, before a loan is approved, it takes time and effort to get through an assessment process that is strictly regulated (by the State bank and/or by laws). Finally, most of the brand equity models are conceptualized by Western authors and validated in developed countries. This poses the question of whether or not these models work well in a developing country like Vietnam. 1.4 Research objective As noted above, in a highly competitive banking sector, a strong brand is likely to sustain competitive advantage for the bank that holds the brand. It is widely agreed in the literature that strong brand increases customers’ trust of the invisible purchase. Strong brands enable customers to better visualize and understand intangible products. They reduce customers’ perceived monetary, social, or safety risk in buying services 3 (Berry 2000) and a good brand name is a first step that will draw consumers to buy (or foster intent to buy), and can make a substantial contribution to brand equity (Aaker, 1991) This research aims to apply the model of brand equity developed by Martensen and Grønholdt (2004) and test this model in the banking sector of Vietnam as an emerging economy. To confirm the applicability of the model, this study will determine the contribution of each of the brand associations to the customer’s brand evaluations and ultimately to the loyalty that customers have with the brand from the perspective of customer- brand relationships in the Vietnamese banking industry. To serve this task, two questions need to be answered: Q1. Is the CBBE model developed by Martensen and Grønholdt (2004) applicable in the Vietnamese banking service? Q2. What factors nurture customer-based brand equity in Vietnamese banking service? 1.5 Scope and methodology of the study 1.5.1 Scope of the study In the banking sector of Vietnam, there are four types of bank: the State-owned banks (including commercial banks and specialized banks such as ‘social policy bank’); 100% foreign-invested banks; joint venture banks and the rest are Vietnamese commercial joint stock banks. The model of customer-based brand equity in this thesis is intentionally applied in the context of the Vietnamese commercial joint stock banks. Only this type of banks is targeted because in the course of globalization and economic integration, all stateowned commercial banks are planned to be equitized, i.e. sooner or later they will 4 become commercial joint stock banks. Second, foreign banks are ignored because the model is intended to be tested with banks in an emerging economy. In addition, customer information from foreign banks is usually confidential and hard to obtain. Finally, banks for special purposes owned by the State are not taken into account due to their special characteristic. For example, credit is rationed by the government for some social purposes. 1.5.2 Research Method This study was conducted in Can Tho city with two phases: a pilot test and the main study. In the first phase, a qualitative approach was employed in order to explore whether the scale for measuring the constructs of brand equity were suitable in Vietnamese culture and the Vietnamese banking service. Some amendments have been made where needed. This step was carried out by using group discussion techniques. A quantitative approach was then used in the second phase. Data were collected by interviewing bank’s customers. The purpose of this phase was to re-assess the reliability of the measurement scales using Cronbach alpha coefficient and Exploratory Factor Analysis (EFA). Multiple Linear Regression analysis (MLR) was employed to test the research model and hypotheses. SPSS software version 16 was used for data analysis. Chapter 3 will discuss the methodology for this study in more detail. 1.6 Structure of the study The structure of this study is shown in figure 1.2 5 Figure 1.2. Structure of the study Chapter 1 Introduction Chapter 2 Literature Review Chapter 3 Methodology Chapter 4 Data Analysis and Findings Chapter 5 Conclusion and implications 6 Chapter 2: LITERATURE REVIEW 2.1 Introduction The previous chapter introduces an overview of the study background, the rationale of the study, the research objective and the research questions. This chapter searches and reviews relevant theories in the literature. The aim of this review is to propose a research model of customer-based brand equity and to generate hypotheses that will be tested in the Vietnamese banking service to answer the research questions and to confirm the research model. Figure 2.1. The structure of Chapter 2 2.1 Introduction 2.2 A brand versus a product 2.3 Brand equity 2.4 Generation of hypotheses 2.5 Conclusion 2.2 A brand versus a product Today, every organization wants to have a brand (Kapferer, 2008). Kapferer (2008) argues that while companies focus on CRM, customer equity, relationship marketing, customer database management… as useful techniques to serve the most profitable customers , these tools will soon loose their potential to create a lasting competitive advantage because the more they are diffused and shared the faster they become standard and used by competitors. Managers learn that a brand is among very few 7 strategic assets of their organizations that can provide long lasting competitive advantage. In the ever-demanding global business climate of the twenty-first century, it is critical that we continue to protect and enhance GE’s unique competitive advantage - our name and reputation. Robert C. Wright Vice Chairman & Executive Officer of GE There is significant difference between a “product” and a “brand”, although most consumers use them interchangeably. But a product is something that tends to offer a functional benefit, whereas a brand is much more than this (Myers, 2003). Gregory (2001) sees a brand as “the sum total of all that is known, thought, felt and perceived about a company, service or product. A ’brand’ is not a thing, a product, a company or an organization. A brand does not exist in the physical world – it is a mental construct” (Cited in Martensen & Grønholdt, 2004). The American Marketing Association defines a brand as "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors”. Each of these elements is individually called brand identity and totally a brand (Keller, 1993). But is it all about the brand? Of course not. “Today's understanding of brand takes it far beyond the somewhat simplistic view of brand that prevailed a decade ago” (Leiser, 2004). A brand is not just merely the name, symbol…or simple combination of those elements of a product or service. In addition, it is believed that beyond those intrinsic elements, a brand also means all the experience and feelings that customers associate with it or even the reputation about the brand echoed either by words of mouth or appears on articles (Philip Kotler & Waldemar Pfoertsch, 2007). “Ultimately, a brand is the things people say about you when you’re not there”, says Jeff Bezos, the CEO of Amazon.com. This statement, of course, implies both positive and negative meaning about the brand. 8 Aaker illustrates the distinctions between a brand and a product as shown in the figure below. Figure 2.2. A brand versus a product BRAND Organizational Associations Country of Origin User Imagery Brand Personality PRODUCT Scope Attributes Quality Uses SelfExpressive Benefits Symbols Brand-Customer Relationships Emotional Benefits Source: David A. Aaker (1996a) What makes a brand such powerful tool? Brands have become a major player in modern society and in fact they show up everywhere (Kapferer, 2008). According to Keller (1998), brands benefit both the consumers and manufacturers. For consumers, a brand is a signal of quality; it helps identify products and services and assign responsibility to manufacturers or service providers; a brand is also the risk and search cost reducer; it is even can be used as a symbolic device…(Aaker,1996; Keller, 1998) Brands also help manufacturers to identify and simplify handling or tracing products. Brands legally protect unique features of a product or service that bears the name. A brand is also a manufacturer or service provider’s promise of quality and 9 especially those functional benefits that the consumer expects; the unique associations endowed to the brand which might provide competitive advantage for the firm; and, maybe the benefit of most concern to shareholders, that it is a source of financial returns. Banks are special institutions. First and foremost, they are the intermediaries between lenders and borrowers and thus their operation involves a process of asset transformation. Second, liquidity is an important service offered to customers who participate in the payments system (Heffernan, 2005). In so doing, on the one hand, banks serve different types of customer with differing needs, which in turn makes it difficult to build a brand that is relevant to all groups ( Stephen Root, 2003; Kapferer, 2008); on the other, by nature, different banks offer similar products and services. As a result, this similarity makes it critically difficult to create product differentiation. With banks the question is: is it necessary to build a strong brand? The answer is twofold. First, in terms of brand as the institution, a bank’s brand is extremely important. As intermediaries, banks usually deal with a large sum of money and therefore “banks rely heavily on their reputation”, and “banking only works if the customer is willing to trust the bank”, argues Uan Percy of Brighten Consultant. This argument is also partly in line with the argument of Lam et tal (2005) that trust plays an important role in developing relationships. A good brand is a source of trust as trust is formed and originates from the result of past experience with the brand (Elena and Josel, 2005). Second, as mentioned above, the similarity of products between banks and their short life cycle makes it very difficult or even impossible to brand an individual bank product. Thus, building a strong institutional brand (the bank’s brand) helps banks increase their competitive advantage and gain more customer loyalty. This is also consistent with the suggestion of Berry et al (1988) that “service brands should be the firm’s name and should not be individualized”. 10 2.3 Brand equity Building a strong brand involves creating brand equity. In a common sense, brand equity is defined as the added value endowed by the brand to the product (Farquhar, 1989). In the last two decades, brand equity has become the most interesting research topic in marketing for both academics and practitioners. Despite the fact that brand equity is a potentially important marketing concept, it is not without controversy (Taylor et al., 2005). It is because brand equity is defined in different ways for different purposes (Keller, 1998). However, in a general sense, the literature suggests that there have been two primary perspectives relating to studying brand equity (Keller, 1993; Taylor et al, 2005; Kapferer, 2008). The first approach is motivated by financial outcome for the firms. With this perspective, the brand is evaluated financially for accounting purpose and is usually manifested in the balance sheet. The second approach is based on the customer-brand relationship. This study adopts the later approach, customer-based brand equity (hereinafter referred to as CBBE). There have been also debates on the importance of brand equity for products and services. Some researchers argue that branding (and thereby brand equity) is more important for services due to the intangible nature and the so-called ‘credence’ attributes of services, which makes it difficult for customers to examine the content and quality of a service before, during and even after the consumption of the service (Darby and Karni,1973; Nelson, 1970 - cited in Krishnan and Hartline, 2001). However, the findings of Krishnan & Hartline (2001) do not support the contention that brand equity is more important in services than for products. Aaker (1996a) defines brand equity as “a set of assets and liabilities linked to a brand’s name and symbol that adds to or subtracts from the value provided by a product or service to a firm and/or that firm’s customers”. Aaker conceptualizes a model of brand equity consisting of 4 main components: 1) brand loyalty, 2) brand awareness, 3) perceived quality, 4) brand associations (which are driven by brand 11 identity: the brand as a product, the brand as an organization, the brand as a person and the band as a symbol). The fifth component is other proprietary brand assets such as patents, trademarks and channel relationships. Keller (1993) generalized the concept of brand equity by the CBBE model. He defines CBBE “as the differential effect that brand knowledge has on consumer response to the marketing of that brand”. According to Keller (1993), a brand is said to have positive CBBE if the consumer reacts more favorably to the marketing of the brand than they do to an unknown or fictitious version of the product or service in the same context. On the other side, a brand is said to have negative CBBE if the consumer reacts less favorably to the marketing of the brand under the same situation. This effect differs based on how favorable, strong and unique brand associations are evoked in the customer’s mind. Recently, Steven A. Taylor, Gary L. Hunter and Deborah L. Lindberg (2005) proposed a model of brand equity (customer-based) for financial services. According to this model, brand equity is derived from the customer’s perception of the quality and thereby the brand value. Other components of their brand equity construct are hedonic brand attitude, utilitarian brand attitude and brand uniqueness. According to the model, brand satisfaction and loyalty intention are the consequences, and positively relate to the brand equity. However, the current study adopts the CBBE model developed by Martensen and Grønholdt (2004). This model captures aspects closely related to banking services. Martensen and Grønholdt (2004) categorize brand associations into two types: 1) rational association and 2) rational and emotional association. The rational associations are in connection with the customers’ perceptions about the functional benefits, tangible aspects or the cost-value evaluation. These associations are very important in banking services. For example, price is a key factor 12 that affects a customer’s decision to stay with a bank (Lam et al, 2005; Colgate and Hedge, 2001; Keaveney, 1995; Bogomolova and Romaniuk, 2005). In other research, Spiros et al (2003) suggest that, “with regard to financial services, consumers tend to become more involved, they develop the habit of ‘shopping around' to find the best bargain”. The emotional associations related to either the intangible or tangible aspect. For example, a customer may feel confident or recognized (social approval) when she or he deals with a great bank’s brand (emotional). This emotion, in turn, is the result of consuming excellent service offered by the bank (performance of the product and service). These associations will be discussed in details in the below. 2.3.1 Brand associations 2.3.1.1 Rational associations Though the product quality is a component of the original model of CBBE; however, banking is a service-dominat industry and all banking products, as termed in the industry, are actually services or packages of service. Therefore, it is argued here that the product quality suggested by Martensen and Grønholdt (2004) is not necessarily to be included in the research model which is soly intended to apply in the banking service. Instead, this study focus on service quality as a component that speaks for the quality aspect of the model. Service quality Service quality has become an increasingly important factor for success and survival in the banking sector (Cui, Lewis and Park, 2003). It’s a critical factor that affects an organization’s competitiveness and an essential determinant that enable a company to differentiate itself from competitors (Spiros et al, 2003). 13