Brand Equity And Sales Performance (A Survey Of Selected Manufacturing Companies In Port Harcourt)
Companies desire earnestly to improve their performance in the market. All marketing decisions and programmes are thus triggered by this reason, because the market performance of a firm is essential to the corporate wellbeing of the business undertakings and also determines the continued existence of the firm in the business landscape. Brand equity as a measure of the health of the brand can be used for marketing decision making. Positive brand equity may create a desire for brand association in other product categories amidst stiff competition and better informed customers. There is a dearth of local empirical evidence supporting the fact that brand equity affects the market performance of food and beverage firms. Therefore, the present study seeks to extend the existing literature by studying the relationships between four dimensions of brand equity and market performance. Data were drawn through questionnaire from the management of food and beverage firms in Rivers State in Rivers State (236). The data instruments were validated using Cronbach alpha’s test, whereupon all variables surpassed the benchmark 0.7. Analyzing the data using the Pearson’s products moment correlation coefficient, ANOVA and regression technique. The study unveiled that through different levels of statistical interactions and directions of relationships, all the dimensions of brand equity studied were critical at P < (0.05) (one tailed) in determining the behaviour of customer acquisition. Specifically, brand awareness was found to have the most critical statistical interaction with market performance, followed by perceived quality, brand loyalty and brand association. Also, there is a significant difference between the opinions of food and beverage firms and end customers in the assessment of market performance. In conclusion, there exists sufficient evidence to show that brand equity significantly affects market performance. The study recommends amongst others that management of food and beverage firms should key in three dimensions of brand equity (brand awareness, perceived quality and brand loyalty) to customer acquisition, since the study reveals that there is a statistically significant relationship between them.
1.1 Background of the Study
Brand equity is a valuable intangible asset for many successful companies in marketplace competition (Voleti, 2008).The brand equity generates a type of added value for products which help companies’ long term interests and capabilities (Chen, 2008). Establishing strong brand is a strategic priority for many companies since general beliefs indicate that powerful brands can be a strength point and a competitive advantage for companies in their target markets. Therefore, brand distinguishes product from a similar one and penetrates into the way of consumers’ perception and cognition.
When brand Elements are ideal in consumers’ minds, brand equity is deemed positive and it is considered as negative if it is not ideal in their minds (Amini, 2010) This competitive advantage is seen in the format of product ideal price, increasing the productivity of marketing strategies, increasing profit margin and cash flow, rising in demand and customers’ satisfaction, facilitating brand expansion, bargaining power, less risk-taking than rivals(Bekhradi, 2009), entry-barriers, and retaining customers, reducing customers’ gaining costs and value-generation for shareholders (Laboy, 2005). As brand strength increases, industrial buyers become more likely to repurchase and pay a price premium (Bendixenetal., 2004; Roberts & Merrilees, 2007; Taylor & et.al, 2007). Higher brand reputation would lead to more assurance of the Industrial product quality (Cretu & Brodie, 2007). The importance of brand equity to business performance has been widely recognised in the literature (e.g. O’Cass and Ngo, 2007; Hooley et al., 2005); specifically, it is considered as main capital for many businesses (Kim and Kim, 2005), and brand equity as one of the market-based assets is expected to generate profitability (Srivastava, Shervani, and Fahey,
2008). Past studies on marketing activities and sales indicate that marketing activities and sales have significant impact on business performance (e.g.: Hooley et al., 2000; Jaworski and Kohli, 2003; Narver and Slater, 2000; Sandvik and Sandvik, 2003). The most recent study of Homburg and Jensen (2007) suggests that market performance is enhanced if each of marketing and sales play their specific roles. That is, marketing emphasises product and longterm
orientation; while sales focuses on customer and short-term orientation. Apart from the direct impact of brand equity on business performance (e.g. Kim and Kim, 2005; Matear, Gray, and Garrett, 2004; Seggie, Kim, and Cavusgil, 2006), brand equity can be considered as a mediating variable in the relationship between marketing, sales, and business performance.
Borghini and Cova (2006) explain that Brand equity is a basis for sellers’ cultivating relationships with buyers. Webster and Keller (2004) also explain that sellers with higher brand equity are more likely to develop and maintain their relationships with buyers. A strong brand helps sellers to reinforce their control over the relational exchange with buyers in sum, brand equity is instrumental to making the buyer–seller relationship stronger, and in turn, this stronger relationship leads to the higher brand equity (Kim & Hyun, 2011).When the brand equity of a product is high enough, target buyers behave positively towards the product. For example, they pay more for the product, purchase it repeatedly, and engage in favorable word-of-mouth behaviors, and so on. In this respect, a firm can enhance its competitive position and increase financial performance by making its brand stronger (Keller, 2008). Beside of Brand equity, marketing mix concept determines organization performance path by using controllable variables in where it has many uncontrollable factors (e.g., market) (darani, 2010; Jandaghi & et.al, 2011b, p.5). Costumer purchase persuasion can be stimulant or synthetic of under control or out of control stimulants (Agrawal & Schmidt, 2003, p.34). Costumers’ loyalty is the result of strategic and favorites marketing activities as well as the environmental impacts and marketing affairs potentially lead to alter costumer behavior (Taylor, 2004, p.218). This loyalty, on one hand, causes to repurchase that expands the product market share, and on the other hand, provides situations that lead to higher pricing brand (Chaudhuri & Holbrook, 2001, p.92). Brand equity and marketing strategy have mutual relationship. As jandaghi & et.al (2011a) and Seyyed Javadein & et.al (2011) imply that Brand equity has a considerable importance in marketing strategy and it has vital role in attracting, retaining, and supporting customer. Brand equity has strategic role and importance in gaining competitive advantage and corporations strategic management decisions.
The brand equity is a tool which helps consumer in such situations (Amini, 2010). Then, in order to direct this subject, we pay to assay effectiveness of marketing strategies in framework of mix marketing in direct to create positive corporate image and powerful brand equity in order to obtain sustainable position and competitive advantage in market and increase their productivity of performance.
1.2 Statement of Problem
Despite of tremendous tendency to brand equity, few conceptual developments and experimental researches are implemented to found that which of the marketing activities create brand equity (Barwise, 2003). Until now, identifying brand equity is mainly emphasized and its resources and development are ignored. Brand equity plays a very important role towards manufacturing companies. The impact of brand equity reflected the company’s sales and also marketing performance. There is limited study on the impact of the brand equity on firm performance in Port Harcourt. Brand is the intangible asset. It’s hard to numerate the return of investment for brand name. It is interesting to know whether the strategies of the company are successful to create the strong brand name. Based on the above, the study will explore the interactive relationship between brand equity management and Sales performance.
1.3 Purpose of the Study
The main purpose of the study is to examine Brand Equity and Sales Performance. The specific objectives of the study are:
- To examine the relationship between Perceived quality and Sales performance of manufacturing companies in Port Harcourt.
- To examine the relationship between Brand Loyalty and Sales performance of manufacturing companies in Port Harcourt.
- To examine the relationship between Brand Awareness and Sales performance of manufacturing companies in Port Harcourt.
1.4 Research Questions
The following research questions will guide the study.
- To what extent does Perceived quality enhances Sales performance of manufacturing companies in Port Harcourt?
- To what extent does Brand Loyalty enhances Sales performance of manufacturing companies in Port Harcourt?
- To what extent does Brand Awareness enhances Sales performance of manufacturing companies in Port Harcourt?
1.5 Conceptual Framework of Brand Equity and Sales Performance.
- Sales Volume
- Perceived Quality
- Repeat Purchase
- Brand Loyalty
- Brand Awareness
The following hypothesis will be used in guiding the analysis of our findings
Ho1. There is no significant relationship between Perceived Quality and Sales Volume.
Ho2. There is no significant relationship between Perceived Quality and Repeat Purchase
H03. There is no significant relationship between Brand Loyalty and Sales Volume
H04. There is no significant relationship between Brand Loyalty and Repeat Purchase
H05. There is no significant relationship between brand Awareness and sales Volume.
H06. There is no significant relationship between brand Awareness and Repeat Purchase.
1.7 Significance of the Study
The study will benefit the owner, merchant or managers in manufacturing to understand the causal relationship between firm brand equity and stock price of company. The rationale of this research is to provide efficient information. For the component of brand equity and helps the firms to determine the factor of brand image that will reflect the stock price of company. The empirical results of this study can help the Rivers State listed company to manage the brand name of their company or product.
1.7 Scope of Study
The general scope of this study covers Brand Equity and Sales Performance. The geographical scope is Rivers State of Nigeria. The study will be limited to selected manufacturing companies in Port Harcourt
1.8 Definition of Terms
Is a systemic managerial process for creating, maintaining, and developing relationships with customers in every position in order to maximize relationship value.
Refers to the improvement of the organizational status in the market (market share), improvement of the customers’ perception of organization and its products, and increase in their loyalty toward organization
The increase in sales over a specific period of time, often but not necessarily annually.
Conclusions, Contribution of the Study and Recommendation
This study focused on investigating the relationship between brand equity and market performance of manufacturing industries in Port Harcourt. The following conclusions can be drawn from the discussions of our findings and from the hypotheses. The study focused on two major respondents: Staff of food and beverage firms and end customers from higher institutions of learning in Rivers State. Besides, the study attempted to assess the extent to which responses from the respondents on brand equity independently explain market performance behavior. The results of the quantitative analysis revealed that there is a sufficient evidence to show that brand equity packages adopted by food and beverage firms affects their market performance through brand awareness, perceived brand quality, brand loyalty and brand association. The Ho1, Ho2, Ho3 and Ho4 were all statistically tested and rejected, indicating that brand equity significantly and positively affects customer acquisition(brand equity). Further there are positive and significant relationships between the specific elements of brand equity and market performance measure, and finally, there is a significant difference between the opinions of food and beverage firms and end customers in the assessment of market performance. It makes sense to argue that brand awareness, perceived quality, brand loyalty and brand extension have the potential to improve upon brand equity which in turn affects the measurement metric of market performance. Therefore, the study concludes that the elements of brand equity significantly affect market performance. Although all the elements of brand equity surveyed affect market performance metric, brand awareness exhibits the most satisfactory significant effects.
The implications of our conclusion are in three folds. First, managers will be guided to focus more on individual and group development of brand equity to ensure improved market performance measured by customer acquisition. Second, it will be a pointer to managers to emphasis more on brand awareness, the most critical influencer of market performance, to develop exposure needed to accurately predict and timely package programmes that firmly establish success in customer acquisition in order to assess positive market performance in the face of stiff competition. Third, although other components of brand equity, aside brand awareness, correlates differently with the dependent variable, managers will be led to exhibit creativity and be strategic in packaging them to ensure a mix that will transform brand equity to optimal market performance. For instance, if a firm’s is after customer acquisition emphasis should focus on brand awareness, followed by perceived quality and brand loyalty. Therefore, the study concludes that the elements of brand equity significantly affect market performance. Management should therefore, key in three dimensions of brand equity (brand awareness, perceived quality and brand loyalty) to customer acquisition, since the study revealed a statistically significant relationship between them.
5.2 Contributions of the Study
This study has contributed to the growing number of literature in brand equity because it has demonstrated that it is possible to conduct a study using two groups of respondents (firms and end customers) in the food and beverages sector, which therefore, implies that it can also be done in any other sector. Specially, based on the findings from the study, the researchers proposes a model of brand equity and market performance as shown in figure 2.This model proposes that market performance is influenced by four dimensions of brand equity with varying degrees of relationship.
Brand awareness has a very moderate influence and is in fact the highest influencer of the dimensions of market performance in the food and beverages firms studied. Perceived quality has a moderate influence on market performance and is the second influencer of the dimensions of market performance. Brand loyalty with a moderate influence on market performance is the third influencer of the dimension of market performance. Although, brand association has a weak but positive influence on the dimensions of market performance, the relationship is significant. To a large extent, these findings enrich the theoretical strength and stimulate replications in order to build theory.
Based on the findings of the study, we proffer the following recommendation: Management should key three dimensions of brand equity (brand awareness, perceived quality and brand loyalty) to customer acquisition, since the study revealed a statistically significant relationship between them.
Food and beverages firms should be proficient in packaging brand awareness, perceived quality and brand loyalty to relate impressively with market performance. This implication is necessary because the study unveiled that brand awareness, perceived quality and brand loyalty were the most statistically significant dimensions of brand equity that determine the behaviour of market performance.
Also, the study recommends that management of food and beverage firms in Rivers State adopt the brand equity and market performance model which was developed by the researchers and can translate theory into practical guidance for managers. This model provides specific enhancers for creating brand equity success in food and beverages firms and would allow management to direct and prioritize resources accordingly and reduce cost of operations.
Finally, in order to enhance customer acquisition, management should design brand equity programs that are capable of arousing or stimulating demands for their products. They should effectively reposition their brands/products in the mind of their customers through perceptual positioning. This will help to enhance customer perception of their products. Thus, the study recommends particularly to the food and beverages firms in Rivers State to be proactive in developing brand equity programmes in their organizations as a means of gaining competitive advantage.
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