Principles of Marketing Research 3

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FastFoodCSUArticle3.pdf

T h e J o u r n a l o f D e v e l o p i n g A r e a s Special Issue on Kuala Lumpur Conference Held in August 2014

Volume 49 No. 5 2015

MALAYSIAN FAST FOOD BRAND EQUITY

Teck Ming Tan*

Taylor’s University, Malaysia

Hishamuddin Ismail

Rasiah Devinaga

Multimedia University, Malaysia

ABSTRACT

Most Malaysian research defines the brand equity dimensions. This paper addresses this gap by

developing an empirical research model with better understanding of sequential relationships

between the dimensions of brand equity within the Malaysian fast food context. The results indicate

perceived quality (PQ) and brand awareness (BA) are the initial stage of brand building. Brand

familiarity, brand image, and brand trust serve as important role in enlightening the relationships

between PQ, BA, and attitudinal brand loyalty (ABL). ABL plays as a key variable for explicating

the relationships between other dimensions and overall brand equity. Future research could explore

the possibility of a longitudinal study through repeated observations, and invariance test across

different samples to make certain the components of measurement model and structural model are

remained equivalent.

JEL Classifications: JEL M13, M31 Keywords: Brand equity, Fast food, Sequential order

Corresponding Author’s Email Address: [email protected]

INTRODUCTION

In 2009, global fast food had reached a market value of $201.1 billion, with growth rate

of 3.1%, the volume reached $208.1 billion of transactions, counted as 3.9% growth rate

(Datamonitor, 2010), and it was considered as an important industry due to its global

trend (Van Zyl et al., 2010). However, the fast food market share in Malaysia was

subjugated by foreign brands (Aseambankers, 2007), reason being lack of expertise in

branding and marketing among local brands (Marshall Cavendish, 2009). Up-to-date, the

existing literature on brand equity model within the fast food industry was still sparse

(Tan et al., 2011). Besides, the identification of relationship among brand equity

dimensions was not clearly extended by the implication of marketing theory (Gil et al.,

2007). Such limitations have caused ambiguity in managing and predicting the tangible

and intangible characteristics of fast food brand. For instance: “Are there any pre-

determinate constructs among the fast food brand equity dimensions?” “Are there any

direct contribution of a) each dimensions b) certain dimensions to fast food brand equity?

The main objective of this research is to develop a theoretical model which

identified the relationships among brand equity dimensions within Malaysian fast food

context. The present study had applied Gil et al.’s (2007) brand equity model into fast

food context and proposed a modified model that was meaningful, both conceptually and

statistically. This research extended the understanding of fast food brand equity

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phenomena and its measurement, by exploring the sequential relationships between the

brand equity dimensions.

LITERATURE REVIEW

Gil, Andrés and Salinas’s Theory of Brand Equity (2007)

Gil et al.’s (2007) theory was adopted to generate a meaningful research in examining the

attitudes of Malaysian fast food consumers. Gil et al. (2007) clearly identified the

relationships among the dimension of consumer-based brand equity based on the

explanation of cognitive-affective-conative, which served as a justification for the

establishment of structural parameter estimate that provided better explanation than some

of the recent studies (e.g. Hess et al., 2011; Patwardhan and Balasubramanian, 2011;

Sanyal and Datta, 2011). Secondly, they categorized the dimensions of brand equity with

theoretical justification. For instance, perceived quality and brand awareness/association

were considered as cognitive constructs, while brand loyalty was considered conative

construct. The main advantage of this approach was this could lead to the better

development of measurement items, which to ensure there were clear operational

definition of the constructs and no overlapping of measurement items (Gil et al., 2007).

Thirdly, the selection of products/brands was based on the level of involvement that

derived from the perception of consumer rather than the inherent characteristic of the

product itself (Malär et al., 2011). Instead, Gil et al.’s (2007) model suffered a few

shortcomings. Their results indicated that both brand awareness and band association

were considered as a joint construct; causing limitation in unraveling the effect of brand

awareness from brand association (Huang and Sarigollu, 2012). Besides, their findings

did not support Aaker’s (1991) brand equity model, proposing perceived quality, brand

awareness and band association do not necessarily contribute to brand equity (Buil et al.,

2013). Contradict with Das (2014) in a food retailing study, awareness, association, and

perceived quality were proven to have significant impact on brand loyalty and purchase

intension.

Different Dimensions of Brand Equity across Industries

Norjaya et al. (2007) classified the brand equity dimensions of household electrical

appliances as brand loyalty, brand distinctiveness and brand association/awareness. Wang

et al. (2008) suggested that global brand equity consisted of quality perception, brand

awareness, brand resonance, and corporation ability association. Xu and Andrew (2009)

defined the conceptual framework of hotel brand equity as brand loyalty, brand

association, brand awareness and quality of experience. Thus, researchers have to

monitor the dimensions of brand equity within the specific industry (Christodoulides and

de Chernatony, 2010). As for fast food industry, brand familiarity (Schlosser, 2002) and

brand trust (Delgado-Ballester and Munuera-Aleman, 2005) were proposed as additional

dimensions as they indicated as important dimensions in the context of fast food (Tan et

al., 2011).

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FIGURE 1. CONCEPTUAL FRAMEWORK OF BRAND EQUITY

Source: Gil et al. (2007)

Hypotheses Development

FIGURE 2. PROPOSED RESEARCH FRAMEWORK

Note: BA=Brand awareness, PQ=Perceived quality, BF=Band familiarity, BI=Brand image,

BT=Brand trust, ABL=Attitudinal brand loyalty, BE=Brand equity.

Gursoy and McCleary (2004) argued brand familiarity was formed by the acquired

information through external sources, for instance word-of-mouth, advertising, and the

use of product. Researchers stressed out that the higher the brand awareness, the greater

the brand familiarity and reputation (D’Souza and Rao, 1995). Brand awareness insisted

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that consumers had to have greater association with its brand image; it served as a vital

element in formatting and presenting a strong brand in consumers’ memory (Keller,

1993).

H1: The higher the awareness of a brand, the greater the brand familiarity

H2: The higher the awareness of a brand, the greater the brand image

When a consumer was confronted with a familiar brand, he or she had felt emotional

closeness and confidence and increased the level of consumer experience, thus drove to

greater formation process of brand image (Zajonc and Markus, 1982). Campbell and

Keller (2003) advocated that increasing brand familiarity through accumulated customer

experiences not only created a knowledge structure for the consumer, but also built up

consumer confidence about the brand, which led to brand trust (Fullerton, 2005).

H3: The higher the familiarity of a brand, the greater the brand image

H4: The higher the familiarity of a brand, the greater the brand trust

According to brand knowledge (Keller, 1993), good evaluation of perceived quality had

increased brand association. This was because when there is good perception of quality,

positive brand image had been created due to greater brand attributes, benefits, and

attitudes as perceived by consumers. Roberts et al. (2004) had applied the concept of

purchase decision stages to rationalize the relationships between perceived quality and

loyalty. They had identified perceived quality as information evaluation stage, which had

contributed significantly to loyalty.

H5: The higher the perceived quality of a brand, the greater the brand image

H6: The higher the perceived quality of a brand, the greater the attitudinal brand

loyalty

A positive corporate image such as high competence and reliability would lead to higher

level of consumer trust (Sichtmann, 2007). Esch et al. (2006) confirmed that there was a

direct impact of brand image on a brand trust, and both direct and indirect influences of

brand image on current and future purchases. Flavián et al. (2006) had stressed that brand

image was one of the fundamental in building a sincere relationship of trust between

customer satisfaction and loyalty. When customers had favorable images towards a

certain brand, this process would exercise a positive influence on the customer’s trust

(Flavián et al., 2006) and eventually reinforced their loyalty (Kandampully and Hu,

2007).

H7: The higher the image of a brand, the greater the brand trust

H8: The higher the image of a brand, the greater the attitudinal brand loyalty

Rauyruen and Miller (2007) argued that in order to gain loyalty of customers, one must

first gain their trust. Brand trust had been recognized as a prominent variable leading to

long-term relationship with customers, which in turn affected brand loyalty in a positive

way (Matzler et al., 2008). This could be further supported by Harris and Goode (2004),

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proved that there was positive consumers trust on customer loyalty.

H9: The higher the trust of a brand, the greater the attitudinal brand loyalty

Previous studies indicated attitudinal brand loyalty had significant effect on brand equity

(Gil et al., 2007; Norjaya et al., 2007; O’loughlin, 2006; Tong and Hawley, 2009). This

showed the essential role of attitudinal brand loyalty in brand equity creation. Thus, this

study proposed the importance of managing loyalty as part of the brand equity

management.

H10: The higher the attitudinal loyalty of a brand, the greater the brand equity

RESEARCH METHODOLOGY

A preliminary study was conducted to select fast-food restaurant chains and to develop

the measurement items of brand image. According to Low and Lamb Jr. (2000), the

development of brand image scale was designed to be product-specific. Chowdhury,

Reardon and Srivastava (1998) also stated that a free response technique needed to be

applied in brand image studies. Therefore, two open-ended questions were addressed to

50 fast food consumers because it allowed for gathering consumers’ point of view,

feelings and any perspective that related to the brand image (Lindlof and Taylor, 2002).

The first question was “Please list three fast food restaurant chains in which you had

most frequently dined”; while the second question adopted Keller’s (2003) “You can

freely describe any characteristics that come to mind when you think about … (above

brand(s) name)… using any words/phrases your choice”. The result showed that the most

popular Malaysian fast food brands were McDonald’s, Kentucky Fried Chicken (KFC),

Pizza Hut, Marrybrown, and 1901 Hot Dogs.

The selected brands controlled approximately 80% fast food market share in

Malaysia (Euromonitor, 2013), represented relevant and reliable brands which finalized

in this study. 8 measurement items of brand image were developed from preliminary

study. The validity of the questionnaire was determined by academicians, who are experts

in the area of branding research studies. The reliability of the measurement items was

tested by 50 pilot surveys of fast food consumers. The range for Cronbach’s Alpha was

from 0.75 to 0.91, which satisfied the cut-off value as suggested, indicated internal

consistency for the constructs (Nunnally, 1978). The final version of measurement items

were presented in Table 1. A total number of 600 self-administrated questionnaires were

distributed because this study was in line with nonprobability sampling of previous

studies (Perez et al., 2011; Yoo et al., 2000). Klang Valley was considered as the most

populated region in Malaysia, which populated with economically and socially most

advances people from diverse ethnic compositions and demographic groups (Norzalita

and Norjaya, 2010). Structural Equation Modeling (SEM) with a confirmatory approach

was selected to analyze multivariate data. This was because SEM was frequently and

widely used technique in psychology and social sciences research (Hair et al., 2010).

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TABLE 1. MEASUREMENT ITEMS

Instrument Items Authors

Perceived quality

The staffs of X give customers individual attention. Kim and Kim

The staffs of X provide its prompt services at promised times. (2005, p.559)

The staffs of X handle complaints of customers effectively.

The staffs of X are always willing to help customers. The staffs of X are knowledgeable. Brand Awareness I am aware of X. Park (2009, p. 56)

X is highly recognized. I have heard a lot about X.

Brand Familiarity

I am familiar with X. Park (2009, p. 57)

I am knowledgeable of X. I can easily recognize X.

Brand Image Easy Preliminary study

Prompt service

Good dining environment

Pleasant

A place for social gathering

Variety of choices

Good value for money

Convenient

Brand Trust X is safe to me. Matzler et al.

I trust X. (2008, p.156)

X is reliable to me. Park (2009, p. 57)

Attitudinal Brand Loyalty I try to visit X because it is the best choice for me. Chiou and Droge

I consider myself to be a loyal customer of X. (2006, p.625)

X is special to me.

I would love to recommend X to my friends.

Brand Equity Even if there is another [fast food category] brand as delicious as

X, I still prefer X.

Gil et al. (2007, p.193)

X is definitely my choice in [fast food category].

Even if another [fast food category] brand has the same price as X,

I would still buy X.

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RESULTS

The study was collected from 1st April, 2011 to 1st May, 2011 across fast food restaurants

that located in Klang Valley, a sampling design was planned to reduce the potential bias

and increase the precision of estimates for non-probability sampling (Chang and Chieng,

2006). Subsequent to the data screening process, 15 surveys were excluded due to

incomplete responses. Thus, 585 or 97.50% of respondents were proceeding for further

analysis. Out of the pool of completed survey forms, 50.43% were male and 49.57% were

female. With respect to ethnic groups, 63.09% were Malays, followed by Chinese

26.15%, Indian 4.96%, and others 5.80%. One item of perceived quality “The staffs of X

are knowledgeable.” and three items of brand image “Easy”, “A place for social

gathering”, “Convenient” were deleted because the standardized residuals values for pair

of items were above 4.0, which deserved for deletion (Hair et al., 2010). After the

purification process, the final measurement models satisfied all the fix statistic values as

recommended by Hair et al. (2010); demonstrated perfect results for the degree of uni-

dimensionality (χ² = 859.593, χ²/df = 3.384, RMSEA =.064, SRMR = .037, CFI = .950,

PCLOSE = .06), and the p-value associated with chi-square was .0001. In term of

convergent validity, the values of construct reliability ranged from 0.86 to 0.94,

enormously above the cutoff value of 0.70 (Nunnally, 1978). Standardized factor

loadings and average variance extracted were above the cutoff value of 0.50 (Hair et al.,

2010). Table 2 presented the average variance estimated of each constructs was above the

squared correlation with other constructs. The results provided evidence that the seven

constructs were unique and had captured some phenomena that other measures had not. It

was evident that these results had contributed adequate evidence for discriminant validity

of the final measurement model (Hair et al., 2010). The goodness-of-fit statistics,

indicating the overall acceptability of the structural model analyzed, were satisfied (χ² =

917.953, χ²/df = 3.490, RMSEA =.065, SRMR = .050, CFI = .946). Out of ten hypotheses,

eight were supported and two were rejected (see Table 3). The squared multiple

correlation (R²) for brand equity was 0.74, attitudinal brand loyalty (0.62), brand trust

(0.67), brand image (0.55), and brand familiarity (0.54). However, R² was not applicable

for exogenous constructs. It was estimated that the predictors of brand equity explained

74 percent of its variance.

TABLE 2. RESULT OF THE DISCRIMINANT VALIDITY ANALYSIS

Construct 1 2 3 4 5 6 7

(AVE) 0.67 0.67 0.69 0.58 0.83 0.77 0.84

1. BA 1

2. BF 0.55(0.74**) 1

3. PQ 0.09(0.29**) 0.08(0.27**) 1

4. BI 0.14(0.38**) 0.23(0.48**) 0.44(0.67**) 1

5. BT 0.22(0.47**) 0.47(0.69**) 0.26(0.51**) 0.53(0.73**) 1

6. ABL 0.23(0.48**) 0.40(0.63**) 0.29(0.54**) 0.52(0.72**) 0.55(0.74**) 1

7. BL 0.17(0.42**) 0.32(0.57**) 0.21(0.46**) 0.35(0.59**) 0.36(0.60**) 0.75(0.87**) 1

a. **. Correlation is significant at the .01 level (2-tailed).

b. Average Variance Extracted (AVE) are greater than the squared correlation estimates, showing discriminant validity.

Note: BA=Brand awareness, PQ=Perceived quality, BF=Band familiarity, BI=Brand image,

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BT=Brand trust, ABL=Attitudinal brand loyalty, BE=Brand equity.

TABLE 3. RESULT OF THE DISCRIMINANT VALIDITY ANALYSIS

b ( 95% CI ) β se t value α Conclusion

Structural parameter estimates

H1 BA → BF 0.83 (0.71-0.95) 0.73 0.06 14.08 ** Supported

H2 BA → BI -0.07 (-0.17-0.03) -0.09 0.05 -1.38 0.17 Not Supported

H3 BF → BI 0.31 (0.21-0.41) 0.40 0.05 6.37 ** Supported

H4 BF → BT 0.48 (0.40-0.55) 0.43 0.04 10.96 ** Supported

H5 PQ → BI 0.48 (0.41-0.56) 0.59 0.04 12.65 ** Supported

H6 PQ → ABL 0.09 (-0.01-0.19) 0.08 0.05 1.84 0.07 Not Supported

H7 BI → BT 0.67 (0.51-0.83) 0.46 0.08 8.49 ** Supported

H8 BI → ABL 0.44 (0.26-0.62) 0.31 0.09 5.00 ** Supported

H9 BT → ABL 0.46 (0.36-0.56) 0.48 0.05 9.43 ** Supported

H10 ABL → BE 0.98 (0.90-1.06) 0.86 0.04 24.95 ** Supported

Squared multiple correlation R²

BA -

PQ -

BF 0.54 BI 0.55 BT 0.67 ABL 0.62 BE 0.74

Notes: b=Unstandardized parameter estimates, CI=Confidence interval, β=Standardized parameter

estimates, se=Standard error, α=Statistical significance level , ** Path analysis is significant at the

.001 level

DISCUSSIONS AND CONCLUSIONS

This model states that both perceived quality and brand awareness are the initial stage of

brand building in consumer-based context. The awareness of fast food brand served as an

important role in enlightening the relationships with brand familiarity (H1: β = 0.73, se =

0.06, t value = 14.08, α < 0.001), however, brand awareness alone was not sufficient in

providing the brand image hold in the consumer’s memory (H2: β = -0.09, se = 0.05, t

value = -1.38, α = 0.17), consistent with Tan et al.’s (2012) study. This was because fast

food brand image involved greater association of consumers’ memory than just recalling

or recognizing (Keller, 2003). Consumers had felt comfortable on trusted brand because

the brand had long-term relationships with them (Sichtmann, 2007; Matzler et al., 2008).

Therefore, the familiarity of fast food brand was essential (H4: β = 0.43, se = 0.04, t

value = 10.96, α < 0.001), as it enhanced consumers’ formation process of brand image

(H3: β = 0.40, se = 0.05, t value = 6.37, α < 0.001) and feelings of greater trust between

the restaurant brand and the consumers. These were because brand familiarity had driven

to a sense of reduced anxiety, faith in the provider, reduced perceptions of risk, and

consumers knew what to expect directly (Lee et al, 2005).

Perceived quality had positive influence on brand image (H5: β = 0.59, se =

0.04, t value = 12.65, α < 0.001), because it involved consumers in developing,

maintaining, and giving meaning to the influence of personal experience of the stimulated

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brands (Dabholkar, 1995). The finding indicated that perceived quality did not

statistically contribute to attitudinal brand loyalty in the context of fast food industry (H6:

β = 0.08, se = 0.05, t value = 1.84, α = 0.07). Nevertheless, this result was in line with

previous studies (Gil et al., 2007; Tong and Hawley, 2009). This could be further

explained that attitudinal brand loyalty had been considered as a conative construct, while

perceived quality was considered as a cognitive construct, based on arguments of

cognitive-affective-conative hierarchical model (Chiou and Droge, 2006). Perceived

quality could drive an effect on attitudinal brand loyalty through affective construct.

Affective construct would serve as the mediating variable, such as “emotional” or

“feeling” responses. Brand image exercised strong influence on brand trust (H7: β = 0.46,

se = 0.08, t value = 8.49, α < 0.001) and attitudinal brand loyalty (H8: β = 0.31, se = 0.09,

t value = 5.00, α < 0.001). Therefore, the image of fast food brand was considered

important because it served as a driver for consumers’ readiness to believe on a particular

brand, referred to its capability of promised functionality and attributes, and drove to

greater loyalty of the brand.

Brand trust contributed significantly on attitudinal brand loyalty (H9: β = 0.48,

se = 0.05, t value = 9.43, α < 0.001). It presented an emotion-driven aspect (affective

character) of long-term relational exchanged between fast food brands and consumers,

rather than the utilitarian value (cognitive character) of the brands. Attitudinal brand

loyalty played as a key variable for explicating the relationships between other

dimensions and brand equity (H10: β = 0.86, se = 0.04, t value = 24.95, α < 0.001). In

other words, fast food brand equity would not exist when there was no attitudinal brand

loyalty. Nevertheless, when there was absence of brands’ affective reactions,

attractiveness, aesthetics, or signals of benevolence (affective sense of brand trust),

consumers would less likely in repeat purchase intention, recommendation to others, or

willingness to pay a price premium. Thus, the trustworthiness of fast food brand served as

a vital antecedent for the development of attitudinal brand loyalty, which ultimately

drove to overall brand loyalty.

In term of limitation, cross-sectional data might have had limited the detection

of causal inferences (Hair et al, 2010). Therefore, a longitudinal study should be

designed, which was often used in psychology, involved a series of observations made

over long period of time. Future research could explore the possibility of a longitudinal

study through repeated observations, and invariance test across different samples should

be conducted to make certain the components of measurement model and structural

model are remained equivalent. In addition, future study should investigate the impact of

distribution intensity, price, store image, price deals, and advertising spending on fast

food brand equity as the success of a branding strategy depends on the marketing mix

(Yoo et al., 2000).

IMPLICATIONS

Malaysian fast food managers have to establish the most relevant brand input in

consumers’ mind. The focus on the identification of the brand position and sequential

order served as a necessity and crucial marketing plan in creating fast food brand equity.

Most of the Malaysian government assistance programs focused on providing advisory

services, market access, infrastructure facilities, financial assistance, and business and

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networking opportunities (Pemadu, 2012). This study provides an alternative approach

for the growth of Malaysian fast food brand, which is based on the development of

fundamental knowledge among local entrepreneurs to achieve sustainable competitive

advantage. The characteristic for each of the brand equity dimensions has to be

communicated clearly. Consequently, local fast food entrepreneurs would have the ability

to identify the antecedents and consequences of brand equity dimensions, thus will have

better blueprint for their branding strategy. Besides, the study also contributes to the

Entry Point Projects 5 of National Key Economic Areas, which increases the standard of

professional management among the local food entrepreneurs by polishing their brand

management skills (Pamandu, 2012).

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