Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
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This study aims at investigating the practicality and application of a customer-based brand equity model in Export Import Bank of
Bangladesh Ltd (EXIM). Keller’s Model has been taken into consideration for evaluating Brand Equity. Structural Equation
Modeling (SEM) has been used to scrutinize the causal relationship of observed variables over un-observed (Latent) variables using
Confirmatory Factor Analysis (CFA). A total number of 430 customers located in 43 branches of EXIM Bank Ltd. have been selected using Simple Random Selection (SRS)-sampling technique. Strong support has been found for brand Awareness,
Brand Association and Perceived Quality dimensions on brand equity, while Brand Image and Brand Loyalty represent weak support. The model fit of the study strongly signify the result as successful estimate of the model. Further research by adding performance measurement into the model could also strengthen this analysis at a next level.
Key Words: Confirmatory Factor Analysis, Brand Knowledge, Brand Equity.
Customers‟ knowledge about a brand has been a field of debate since long. Handful research endeavors have made this topic even more complex to sum up with any consolidated conclusion. Both successful and immature companies agreed on importance of creating customers‟ knowledge for long term relationship and eventually to create customers‟ loyalty.
According to Keller (1993), Brand knowledge is associated with Brand Awareness. Companies, nowadays, have been giving priorities of developing not only brand image or brand loyalty but also brand awareness; let people know what the company is, why the company is and how the company is making good to the society. Developing business strategies by centering brand knowledge blessed many companies to be called successful business eventually. This research has made an effort to explore role of brand knowledge over creation of brand equity specially for banking service providers particularly of Export Import Bank of Bangladesh Ltd (EXIM).
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Md. Abul Kalam Azad
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, Assistant Professor, Department of Business Administration, International Islamic University
Chittagong, House#23, Road#3, Dhanmondi, Dhaka-1205, Bangladesh.
E-mail: azadiiuc@gmail.com
,
Maruf Al Muzahid
2
, Assistant Professor, Department of Business Administration, International Islamic University
Chittagong, House#23, Road#3, Dhanmondi, Dhaka-1205, Bangladesh.
Md. Afsar Kamal
2,
Assistant Professor, Department of Business Administration, International Islamic University
Chittagong, House#23, Road#3, Dhanmondi, Dhaka-1205, Bangladesh.
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
Main objective of the paper is to Evaluate Keller‟s Model of Brand Equity and its mediating role of Brand Knowledge. Associated specific objectives are;
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To calculate factor dimensions of brand equity of EXIM Bank Ltd.,
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To examine level of customer knowledge about the bank, and
 To evaluate specific role of customer knowledge over bank‟s Brand Equity.
This paper is inductive in nature by developing a theory rather establishing existing theory.
Pilot study has been made before collection of data from the respective customers of EXIM Bank
Ltd. Total number of 430 respondents were targeted as sample. This empirical research is completely based on primary data collected from customers of EXIM from the 43 branches located in Dhaka City. From each branch, a number of 10 (ten) respondents have been selected randomly where 315 customers were successfully interviewed. Structured Questionnaire on
Brand Equity have developed on a five-point Likert scale (1 = Low score of agree to 5 = strongly agree).
Theory derived literature has been guided the entire study. As the first criterion, Cronbach
Alpha has been used for which a value of more than 0.7O is proposed which seems to reflect the idea of what an acceptable Alpha should be. Criterion that used for average inter-item correlations is that they should be more than 0.30. Secondly, for the factor loading and principle component analysis the following criteria were used: factor loadings would be higher than 0.50 and the difference between factor loadings of an item on two factors to be more than 0.10.
Therefore, the scales which have been adopted have fewer items than the scales as developed in the paper.
Brand Equity has been the center point of marketing research since mid 20 th
century. Even very recent studies for example, Azad, Haq and Muzahid (2013) have examined sustainability of commercial banks showing strong relationship between sustainability and brand equity using both exploratory factor analysis (EFA) and Confirmatory factor analysis (CFA) for data extraction and analysis. The calculated factor loading were four, where most significant variable was brand image. Fatema, Azad, Masum (2013) have advocated that a positive correlation exists between
BI and BL for IBBL. Moreover, strong influence of Brand Loyalty over Brand Equity was found that of Brand Image in case of IBBL. The model fit of the study strongly signify the result as successful estimate of the model. Rego, Billett, Morgan (2009) have also found that a firm‟s
CBBE is associated with firm risk and explains variance in the risk measures beyond that explained by existing finance models (i.e., it has “risk relevance”). They also find that CBBE has a stronger role in predicting firm-specific risk than systematic risk but that it also has a particularly strong role in protecting equity holders from downside systematic risk.
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
Jung and Sung (2006) have looked at the elements of brand equity, the perceived brand quality and brand awareness/association reported by American college students were significantly greater than those reported by South Koreans in the USA and Korea. For both South Korean groups, brand loyalty was the most important element of brand equity. In the relationship between elements of brand equity and purchase intention, brand loyalty showed positive correlation with purchase intention across all three consumer groups. Anselmsson, Johansson and Person (2007) have retrieved that brand equity and price premium focusing on the grocery sector specifically highlights the role of uniqueness, together with the four traditionally basic dimensions of brand equity proposed: awareness, qualities, associations and loyalty. Relevant brand associations (origin, health, environment/animal friendliness, organisational associations and social image), and quality attributes (taste, odour, consistency/texture, appearance, function, packaging and ingredients) specific to groceries are identified and proposed for future measurement scales and model validating research.
“Brand equity” emerged in the 1980s, there has been a growing interest in the subject among marketing academicians and practitioners (Cobb-Walgren, et al., 1995). The meaning of the term brand equity has been debated in a number of different ways and for a number of different purposes (Keller, 2002). Brand equity is the added value endowed by the brand name (Farquhar, et al., 1991); it is the difference between overall brand preference and multi-attributed preference based on objectively measured attribute levels (Park and Srinivasan, 1994); and overall quality and choice intention (Agarwal and Rao, 1996). Based on the value of brand equity, Aaker (1991) defines it as a set of assets (and liabilities) linked to a brand's name and symbol that add to (or subtract from) the value provided by a product or service to a firm and/or that firm's customers.
Compared to the definition of brand equity from a financial perspective as the total value of the brand that is a separable asset when it is sold or included in a balance sheet (Feldwick, 1996), customer-based brand equity is defined from the perspective of the customer and is based on consumer knowledge, familiarity, and associations with respect to the brand (Washburn and
Plank, 2002). Proponents contend that for a brand to have value, it must be valued by the customer. If the brand has no meaning to the customer, none of the other definitions is meaningful (Cobb-Walgren et al., 1995; Keller, 1993). Keller (1993, p.2) coined the customerbased definition of brand equity (CBBE) as “the differential effect of brand knowledge on consumer response to the marketing of the brand”. A thorough understanding of brand equity from the customer‟s point of view is essential for successful brand management. As Keller (1993, p.8) explains, positive customerbased brand equity “can lead to greater revenue, lower cost, and higher profit; it has direct implications for the firm‟s ability to command higher prices, a customer‟s willingness to seek out new distribution channels, the effectiveness of marketing communications, and the success of brand extensio ns and licensing opportunities”. Oliver (1980) considered the customer satisfaction as most vital outcome of marketing activities.
Jamal and Kamal, (2004) studied that satisfaction level of the customer increases only when on giving less price he gets maximum benefits and profits. Customer gets dissatisfied only when the concern of pricing is not favoring the consumer‟s needs. So in banking industry the loan interest rates, online service charges and processing fee work as hurdle between bank and its customers. Perception of a brand by the consumer refers as brand image (Aaker, 1996).
Kapferer (1997) studied the brand image as an outcome of the message decoding that is mediated by the sender. If positive brand image is developed then it would amplifies the
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9 likelihood of brand choice and customer satisfaction thus minimizing the susceptibility to competitive marketing events. That is why brand image is considered as the snapshot impression by Berry (2000) that deals with what comes to the mind of the customer instantly once mention
„Islamic bank‟. Thakor and Katsanis (1997) supported the idea by proposing that brand image enables the consumers to identify the product or service may evaluate the quality of the product or service, minimize the purchase risk and gain satisfaction through product differentiation.
Aaker and Keller (1990) researched that positive Brand Image (BI) image of the brand helps in elevating the customer satisfaction, trust and build up the strong repurchase intentions.
Perceived quality (PQ) is the “core/primary” facet across the CBBE framework (Aaker, 1996;
Farquhar, 1989). Brand awareness (BAW) is an important component of brand equity. It refers to thability of a potential buyer to recognize or recall a brand as a member of a certain product category (Aaker, 1991). According to Keller (1993), brand awareness consists of two subdimensions: brand recall and recognition. Brand association (BAS) is anything "linked" in memory to a brand (Aaker, 1991). It is believed to contain the meaning of the brand for consumers. Brand association can be seen in all forms and reflects features of the product or aspects independent of the product itself (Chen, 2001). Brand loyalty (BL) is at the heart of brand equity. It is the major component (Aaker, 1991). From an attitudinal perspective, brand loyalty is defined as “the tendency to be loyal to a focal brand as demonstrated by the intention to buy it as a primary choice” (Oliver, 1997).
Analysis of the selected respondents, 315 were successfully interviewed and were used in the final analysis. Structural Equation Modeling (SEM) was employed for Exploratory Factor Analysis.
Exploratory Factor Analysis In Exploratory Factor Analysis the aggregate measures for data were correlated with each other and with the scales derived from factor analysis. To assess the reliability and internal consistency of the scales several criteria were used. Items that did not meet the criteria were left out from subsequent analyses. This was done to increase the homogeneity of the scales. A two-step approach has been recommended by Anderson and
Gerbing (1988). In the first stage, the measurement model was analyzed to ensure sufficient reliability and validity of the constructs. In the second stage, the factor loading of each variable were tested and analyzed.
Reliability I nternal consistency of the collected data. Often, only Cronbach's Alpha (α)
(Cronbach, 1951) is given as an indication of internal consistency. This, however, has two problems. First, α is affected by the number of items in a scale. A value of Alpha higher than 0.70 has been suggested as adequate by Nunally (1967). However, α of a scale with many items can be higher with a relatively low average inter-item correlation. In a uni-dimensional scale, a relatively high average interitem correlation would be expected. Secondly, α is affected by dimensionality within a scale. Although α decreases as a function of multidimensionality, it can reasonably be high even when items are somewhat interrelated (Cortina, 1993). Therefore, not only Cronbach α but also the average of the scale were calculated.
This demonstrates consistency of the observed variables (Table 01). The values of Inter-item
Standard Deviation (SD) of the latent factors reveal that respondents were heterogeneous in nature (Cronbach, 1951). The combined result of Cronbach Alpha for all the 26 variables scores
0.762 which is really high. This overall high value of Cronbach Alpha signifies almost consistency of all the collected data used for the paper.
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
Table 01: Reliability Score of Latent Factors
Reliability Statistics
Cronbach's
Alpha
N of Items
.762 27
Source: Computed with primary data using SPSS (20)
Adequacy of sampling has been done using Kaiser-Meyer-Olkin measurement in Table 02. All 20 observed variables were considered for the test. It resulted 0.873 and signify satisfactory sampling adequacy for testing farther factor analysis. Bartlett‟s Test of Sphericity was also tested which results positive Chi-Square with significant level of 0%.
Table 02: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy.
Approx. Chi-Square 1238.429
Bartlett's Test of
Sphericity
Df
.873
78
Sig. .000
Source: Computed with primary data using SPSS (20)
It should be noted here that BAW1,BAW2,BAS2,BL2,BL3,BL5,PQ3,PQ4, and BIM1,BIM2,BIM3 are significantly and positively (Appendix, Table I) correlated. This represents Nonparametric
Zero-Order Correlations Coefficient between the observed variables. Using the results, 10 (ten) observed variables have been reduced in order to make the factor to be loaded properly. In the simple regression test, they found to be less influential than the correspondent observed variables and hence reduction of these eight variables gives a properly loaded factor result.
At first, all observed variables were used to run in PCA to know the basic dimensions among the variables. A common practice is to delete non performing items (i.e. BAW 3; I am familiar with the brand, BAS1; EXIM has very unique brand image, compared to competing brands, BAS2; I respect and admire people who have account at EXIM, BAS3; I like the brand image (Islamic image) of EXIM, etc.). A total number of thirteen non-performing items with cross loading in factor analysis was deleted and finally a clean factor structure was performed. From the output, four factor solutions were emerged with eigen values exceeding 1 (one). Following scree plot (Figure
1) shows the above results graphically. It depicts that four factor/component could be extracted from the data set using varimax rotation.
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
Figure 1: Scree plot
Table 03 shows that the results of the factor analysis using PCA with varimax rotation technique to determine dimensions of observed variables. After grouping the variables with a factor loading higher than 0.5 under a factor the result of factor analysis shows that there were three Brand Equity dimensions effect the total customer based Brand Equity. These four factors are accounted for total variance 48.352% (Table 3).
First Component (Factor 01): This component is consist of initial four observed variables namely
BAW2 (I can rcognize the bank among other competing banks),BAW3 (I am aware of the brand)BAS1(I can quickly recall the symbol/logo of brand)BAS3 (I respect and admire people who have account at EXIM)BAS4 (I believe that this bank is contributing to the society) BL4 (I would not switch to another bank) with factor loading of .627, .630, .683, .700, and .641 respectively. This component alone is account for 37.015% of variation with an Eigen value of
4.812 (Table 03). Such high result signifies that within this analysis the above-mentioned seven observed variables are mostly significant for the calculation of customer based Brand equity of
EXIM.
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
Table 03: Factor analysis of Customer Based Brand Equity
Rotated Component Matrixa
BAW2
Component
Factor 1
.759
BAW3
BAS1
BAS3
BAS4
BL4
PQ1
PQ2
PQ5
.627
.630
.683
.700
.641
BL1
Eigen Value 4.812
Factor 2
.641
.624
.716
.679
1.474
Variance 37.015% 11.337%
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser
Normalization. a. Rotation converged in 3 iterations.
Second Component (Factor 02): This dimension is consist of four variables namely PQ1 ( This brand is very reliable) PQ2 (Service of this bank is satisfactory)PW5 ( I trust the quality of service based on shariah) BL1 ( I consider myself to be loyal to EXIM), with factor loading of .641, .624,
.716 & .679 respectively. This dimension is second most priority factor for higher level of brand equity scoring Eigen value of 1.474 with 11.337% of variance (Table 03).
Results from the study signifies that Brand Awareness (Also known as Brand Knowledge) has been placed into first dimension of factor analysis and hence a higher percentage of importance is required for creating brand awareness than other latent variables of customer based brand equity. It is also to be mentioned here that such high result for brand image creates an opportunity to reshape the model of brand equity given by Aaker‟s five factor model.
Islamic financial services providers may employ these antecedents to review their service quality from customer‟s perspective in the long run. Moreover, since all the antecedents are positively associated with the customer satisfaction, Islamic banks may like to enhance focus on them to
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9 increase their customer base by increasing the satisfied customers. Effective brand management contributes to long term sustainability of the financial institution besides enhancing the customer loyalty. The sample size in the present study comprises of 315 respondents mainly in the few areas of Dhaka City. Future researches may also be carried out by using the greater sample size to investigate more about the customer satisfaction in an Islamic banking perspective. There are many other factors as price, processing time, convenience etc. that might influence the customer‟s decision making process. Hence, they may also be incorporated in this model while carrying out the future researches. This study is focusing only on Exim Bank of Bangladesh Ltd. customers in Bangladesh so for future research comparison of different Islamic banks, may also be carried out to determine the best practices.
Aaker, D. A. and Keller, K. L. (1990) .Consumer Evaluations of Brand Extensions, Journal of
Marketing 54 (1), pp. 27-41
Aaker, D.A. (1991), Managing Brand Equity, Free Press, New York, NY.
Aaker, D.A. (1996). Building Strong Brands. New York: The Free Press.
Agarwal, M.K., and Rao, V. (1996), “An empirical comparison of consumer based measures of brand equity”, Marketing Letters, Vol. 7, No. 3, pp. 237-247.
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Marketing Science Institute, Cambridge, MA
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Loyalty in Measuring Brand Equity of Islami Bank Bangladesh Ltd, Asian Business Review
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Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
Oliver, R. (1980) A cognitive model of the Antecedents and consequences of satisfaction decisions. Journal of Marketing Research. 17(4), pp. 460.
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BL1
BL2
BL3
BL4
BL5
BIM1
BIM2
BIM3
PQ1
PQ2
PQ3
PQ4
PQ5
BAW 1
BAW 2
BAW 3
BAS1
BAS2
BAS3
BAS4
Proceedings of 9th Asian Business Research Conference
20-21 December, 2013, BIAM Foundation, Dhaka, Bangladesh ISBN: 978-1-922069-39-9
List of variables and their short name
Short form Type
Perceived Quality
This brand (EXIM) is very reliable.
Service of this bank is satisfactory.
This bank has offers excellent features.
The interior appearance of this bank is attractive.
I trust the quality of the service (based on Shariah).
Brand Awareness
Some characteristics of the bank come to my mind quickly.
I can recognize the bank among other competing banks.
I am aware of the brand.
Brand Association
I can quickly recall the symbol/logo of brand.
I like and trust this brand for its Shariah Compliance.
I respect and admire people who have account at EXIM.
I believe that this bank is contributing to the society.
Brand Loyalty
I consider myself to be loyal to EXIM.
When doing banking, this bank is my first choice.
I am satisfied with service of this bank.
I would not switch to another bank.
I would recommend this bank to others.
Brand Image
This brand has Convincing image.
This bank offers guaranteed Halal products.
The staff is knowledgeable and practicing Muslim.
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