IMPACT OF BRAND EQUITY ON CONSUMER/BRAND LOYALTY IN SMES (A CASE STUDY OF MAY AND BAKER PLC)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Nowadays, product brand equity is an important factor to influence customer patronage and perceptions of the brand and in fact, the success in managing brand can be achieved by understanding and proper management of brand equity and in this way, there can be created strong characteristics of brand that influences the decision-making ability of customers to choose brand (Pike et al,2010).Brand equity is an added value created due to brand for the organization. This concept is discussed in different ways and for different purposes (Glynn et al, 2007).Generally, brand equity is the value added to a product by brand(Hanna & Wozniak, 2001).For companies, strong brand equity enable them to acquire price premium and increase market share thereby maintaining loyal customers (Kayaman & Arasli, 2007). David Aaker(1991) says: brand equity increase the efficiency of marketing programs brand and customer loyalty, decreases expenses and costs of promotional or marketing activities and creates a platform to develop via brand expansion. Therefore, brand equity makes benefits and for the organization creates cash flow (Buil et al, 2008). In recent times, the brand value is formed by loyalty and customer purchase preferences for organization, i.e. strong products brands can have loyal and returning customers and can be placed in customer purchase preferences. Indeed, the key to the growth and survival of any organization is customer satisfaction and in this regard, brand equity has a vital role to play. Therefore special attention to brand has led many theorists, business managers, researchers to call the future world of marketing as world of brand and branding related activities. Perhaps no investment can be more efficient than an effective, reliable and value-creating name to an organization. In many markets, there is little difference between different products. Notebooks, shoes, electronic appliances, news sites, television channels and applications do not show such a difference, one of the most influential factors affecting consumer choice is the brand of such products and services (Ballester and Munuera, 2005 ). Many studies and their related literature emphasize the brand equity of tangible products and there are fewer studies about brand equity of services (Kayaman & Arsali, 2007) .Brands are very vital for services, because the intangible nature of services makes the qualitative assessment difficult to customers (Krishnan & Hartline, 2001). This can be seen in spite of the fact that there is the difference between goods and services. Most goods are tangible and physical. However, services are intangible, such as banking. Customer experience of services and its relationship with the brand, is not the result of what happens in the factory, but it is directly related to the people who provide the service (Mohammadian, 2011). Davis and Keller (2001) argue that marketers in service sectors can measure and manage strength of brands through research about brand equity (Taylor et al, 2007).

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.

STATEMENT OF THE GENERAL 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 crucial role towards the growth of small businesses. The impact of brand equity reflects marketing performance.

Brand is an intangible asset that plays a crucial role in marketing. 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 impact of brand equity on consumer brand loyalty in SMEs.

AIMS AND OBJECTIVES OF THE STUDY

The main purpose of the study is to examine the impact of brand equity on consumer brand loyalty in SMEs. Other specific objectives of the study include;

1)     To examine the relationship between brand equity and consumer brand loyalty.

2)     To examine the relationship between consumer brand loyalty and repeated sales of a product.

3)     To examine the level of implementation of brand equity in SMEs in Nigeria.

4)     To recommend ways of improving brand equity in other to ensure growth of small businesses in Nigeria.

RESEARCH QUESTIONS

1. What is the impact of brand equity on consumer brand loyalty in Nigeria?
2. What is the relationship between brand equity and consumer brand loyalty?
3. What is the relationship between consumer brand loyalty and repeated sales of a product?
4. What is the level of implementation of brand equity among SMEs in Nigeria?
5. What are the ways of improving brand equity in other to ensure growth of small businesses in Nigeria?

RESEARCH HYPOTHESES

 The following hypothesis will be used in guiding the analysis of our findings.

Ho1. There is no significant relationship between brand quality and consumer brand loyalty.

Ho2. There is no significant relationship between consumer brand loyalty and repeated sales

SIGNIFICANCE OF THE STUDY

The study will be of immense benefit to small and medium enterprise owners, merchant or managers in manufacturing to understand the impact of brand equity on consumer brand loyalty. The rationale of this study is to provide efficient information on brand equity which will help business managers on how to increase patronage through adequate branding.

SCOPE AND LIMITATION OF THE STUDY

The general scope of the study covers Brand Equity and consumer brand loyalty. The geographical scope is in Lagos state of Nigeria.  The study will be limited to the may and baker pharmaceutical company, Lagos state, Nigeria.

OPERATIONAL DEFINITION OF TERMS

Brand Equity is a systemic managerial process for creating, maintaining, and developing relationships with customers in every position in order to maximize relationship value.

Marketing performance: 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

Sales growth: The increase in sales over a specific period of time, often but not necessarily annually.