Country of origin

1. Marketing Intelligence & Planning
Impact of country of origin and word of mouth on brand equity
Sri Murtiasih Sucherly Sucherly Hotniar Siringoringo
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Sri Murtiasih Sucherly Sucherly Hotniar Siringoringo , (2014),"Impact of country of origin and word of mouth
on brand equity", Marketing Intelligence & Planning, Vol. 32 Iss 5 pp. 616 - 629
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Jillian C. Sweeney, Geoffrey N. Soutar, Tim Mazzarol, (2012),"Word of mouth: measuring the
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2. Impact of country of origin and
word of mouth on brand equity
Sri Murtiasih
Research Institute, Gunadarma University, Depok, Indonesia
Sucherly Sucherly
Department of Marketing, Universitas Padjajaran, Bandung, Indonesia, and
Hotniar Siringoringo
Research Institute, Gunadarma University, Depok, Indonesia
Abstract
Purpose – The purpose of this paper is to explore the effect of the image of country of origin (COO)
and word of mouth (WOM) toward brand equity (BE).
Design/methodology/approach – Questionnaire was deployed to collect data. Prior to data collection,
validity, and reliability tests were performed. Valid and reliable questionnaire was distributed to car
customer in Jabodetabek region. It was succeeded to distribute 389 questionnaires and completely filled up
by respondents. Structural equation modeling further was deployed to analyze the data.
Findings – COO and WOM significantly influence BE indirectly thorough BE dimensions. WOM
exhibited stronger influence toward BE. The influence of COO and WOM toward BE dimension was
also investigated. WOM showed stronger influence toward BE dimension, in descending order are
brand loyalty (BL), brand association (BAS), perceived quality (PQ), and brand awareness (BA). COO
showed weaker influence and different order, in descending order are BA, PQ, BL, and BAS.
Originality/value – Role of WOM in marketing has been extensively discussed by researchers.
It is generally acknowledged playing a considerable role in influencing and forming consumer attitudes
and behavioral intentions. However, up to this date role of WOM on BE has not been explicitly studied
by researchers. COO in another hand has been related to BE although in a limited references. Those
studies were performed outside of Indonesian consumer. Up to this date study of COO of Indonesian
consumer behavior remains unaccounted.
Keywords Marketing, Consumer behaviour, Market research, Consumer marketing
Paper type Research paper
Introduction
Research interest in branding started way back in the 1960s with tremendous attention
from many researchers. Among other branding aspects, brand equity (BE) has been
studied extensively (Ambler, 1997; Batra. et al., 2000; Zeugner-Roth et al., 2008; Swaminathan
et al., 2009; Keller, 2010; Hamzaoui-Essoussi et al., 2011).
Despite this considerable interest, the factors specifically influencing BE have been
overlooked (Barwise, 1993). Most researches focussed on developing BE constructs (such
as Keller, 1993; Agarwal and Rao, 1996; Sinha et al., 2008; Broyles et al., 2009; Menictas
et al., 2012). The few researchers who studied factors influencing BE include Bawa and
Shoemaker (1987), Kim et al. (2008), and Joshy and Sivakumaran. Most researchers
studied the relationship between some BE dimensions and various other factors.
Although consumer behavior researchers currently demonstrated an interest in
the impact of country of origin image (COO) on BE, the work has generally focussed
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-4503.htm
Received 30 April 2013
Revised 21 June 2013
23 August 2013
5 August 2014
Accepted 27 August 2013
Marketing Intelligence & Planning
Vol. 32 No. 5, 2014
pp. 616-629
r Emerald Group Publishing Limited
0263-4503
DOI 10.1108/MIP-04-2013-0073
This paper has been presented at MARCON 2012, organized bythe Indian Institute of
Management Calcutta (IIM C) and selected for publication in Marketing Intelligence and
Planning on Emerald journal.
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3. on how the dimensions of COO relate to different dimensions of BE, or on how these
relationships might change due to other variables. A study an COO of Indonesian
consumer behavior remains. As to be conducted citizens of a developing country,
consumers in Indonesia take into consideration the symbolic is nature of COO to
enhance their status, in addition to demonstrating the quality of the overall product.
There are a number of explanations as to why the COO image is stronger in developing
countries (Batra et al., 2000). First, imported products in developing countries are
relatively more expensive and rare than the local products. Only consumers with high
purchasing power are able to buy imported products, although they are increasingly
desired by people who do not have sufficient purchasing power. Second, consumers in
developing countries tend to have a sense of insecurity and low self-esteem, because
they are relatively poorer than those in developed countries. They therefore try to
imitate the consumption practices and lifestyles of luxury and prestige of people in
developed countries, by purchasing foreign brands which symbolize life in the west.
Third, the desire to demonstrate their purchasing competence underlies the emergence
of “cosmopolitan” consumers in developing countries. Owning imported products
may be the only way to demonstrate their competence. Not all developing countries
have access to products from around the world, so that they become a status symbol,
representing wealth, and modernity, which can in turn improve their social status.
The more they use or consume imported products, the more status.
Role of word of mouth (WOM) in marketing has been researched extensively. It is
generally acknowledged as playing a considerable role in influencing and forming
consumer attitudes and behavioral intentions (Sen and Lerman, 2007; Xia and
Bechwati, 2008; Trusov et al., 2009). However, to date, the impact of WOM on BE has
not been studied explicitly. The present study is an extension of Murtiasih et al. (2013)
on the role of WOM in BE of car customers in Indonesian market.
Given the fact that COO and marketing communication can be an influential factor
in determining consumer choice, the purpose of the study was to explore the effect of
COO image and the influence of marketing communication (WOM) on the brand and
the formation of BE.
Literature review and hypothesis development
BE
According to Aaker (1991), BE is a set of assets and liabilities associated with the brand,
name, and symbol, which can increase or decrease the value provided by the product or
service to the company and/or to customers. Various studies have been conducted on
how to develop BE dimensions, including dimensions of brand awareness (BA) and
brand image (BI) (such as Hamzaoui-Essoussi et al., 2011), brand image (BI) and brand
loyalty (BL) (such as Yasin et al., 2007; Yoo et al., 2000), as overall quality and choice
intention (Agarwal and Rao, 1996). However, the most commonly used are the five
indicators of BA, namely brand association (BAS), perceived quality (PQ), BL, and other
brand-related assets (Aaker, 1996). In practice, only four of the five indicators are used in
research on consumer-based BE, which are BA, BAS, PQ, and BL.
BA is defined as the ability of consumers to recognize, acknowledge, and remember
a brand (Aaker, 1996). BA refers to the strength of a brand in consumer memory (Keller,
1993). The level of BA entails a sequence progressing from “non-brand recognition,”
“re-call a brand,” “brand recognition,” and culminating in “top of mind.” The level of
“non-brand recognition” refers to cases in which a brand is simply does not enter into
a customer’s mind. At the level of “re-call a brand,” consumers do not remember a brand
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4. spontaneously, but they will remember and be aware of the brand after being reminded.
A brand in the category of “brand recognition” is a one that can be referred to by
consumers quickly when associated with a particular product. A brand categorized as
“top of mind” is when the name of the company is automatically recollected, because the
consumer very promptly associates the brand with the product category (Aaker, 1991).
BAS is everything in consumer that is memory associated with a brand (Aaker,
1991). BAS helps in processing and managing information, distinguishing the brand
from others, creating positive attitudes or feelings, and evoking reasons to buy the
brand (Osselaer and Alba, 2000). Some researchers agree that BAS is similar to BI,
which is a set of associations that are formed in the mind of consumers about a brand
(Kim and Kim, 2004). BAS represents the meaning of the brand to consumers and is
closely related with BA, because both dimensions emerged from consumer contact with
the brand (Aaker, 1991; Fournier, 1998). Each new experience with the brand creates,
strengthens, or modifies individual relationships (Keller and Moorthi, 2003), and
creates various classifications in relation to product features, both visible and invisible,
type of consumer, lifestyle, and so on (Aaker, 1991; Keller, 1993).
PQ is defined as “consumer ratings on all the benefits or privileges of a product”
(Zeithaml, 1988). Consumers perceive the quality of brands through direct experience
with the brand and information obtained from the environment (Yoo et al., 2000).
There are a number of factors to consider in analyzing and measuring perceptions of
quality, such as reliability, durability, appearance, performance, repairability, and so on
(Parasuraman et al., 1985). High quality perception arises when consumers recognize
the differences and advantages of one brand compared to others (Yasin et al., 2007).
BL is a form of response or consumer attitudes and a psychological process ( Jacoby
and Kyner, 1973). BL is a consumer’s commitment to a positive assessment of the brand
and the making of repeat purchases (Mustafa, 1999). BL is often measured in terms
of repeat purchase behavior or price sensitivity. Consumers who are loyal to the brand
do not perform attribute evaluation, but simply choose a brand that is familiar, because
of positive feelings toward the brand. Positive overall evaluation is derived from past
experience with the product and brand name attributes (Keller and Moorthi, 2003).
Based on the above studies, the first hypothesis to be tested was:
H1. The BE dimensions for car customers in the Indonesian market are BA, BAS,
PQ, and BL.
COO and WOM
The image of COO refers to the picture, reputation, and stereotype that consumers and
business people attach to a product from a specific country. This picture can be derived
from the typical characteristics of product itself, those of the COO, economic and
political aspects, history and customs, or traditions of the COO (Nagashima, 1970).
Consumer behavior researchers generally agree that the COO of a product or brand is
an important factor influencing consumer decisions (Khachaturian and Morganosky,
1990; Knight, 1999; Piron, 2000). Most previous studies reveal that COO information is
indicated by the label “Made in [y]” which is influential in the purchase decision
process. Such information serves as an attribute in the evaluation of the product by the
consumer ( Johansson, 1989), stimulating the interest of consumers in the products
(Hong and Wyer, 1989), influencing intention behavior through social norms (Fishbein
and Ajzen, 1975), and influencing buyer behavior through affective processes such as
consumer patriotism toward their own country (Han and Terpstra, 1988).
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5. COO is one of considerations for customers in choosing a brand. Positive
assessment by the consumer of a brand, that is based on where it originated, will
increase BE (Lin and Kao, 2004). Consumer rating of a brand, either positive or
negative, is supported by the consumer knowledge and perception about the brand’s
COO (Paswan and Sharma, 2004). COO can be considered as a type of branding
strategy, as it seeks to develop a competitive advantage based on familiarity with the
brand name or the country. COO serves as a contributing factor to any products sold in
international markets.
Many studies have shown that COO affects consumer assessment of a brand, but
few researchers have considered the extent of influence of the COO (Bozell-Gallup,
1996). Paswan and Sharma (2004) and Shocker et al. (1994) argue that consumer
perceptions of COO of a brand are particularly important in transferring the images
from the COO to brand image. If consumers do not know the brand’s COO, then
the consumer’s valuation and their perceptions of a brand (perceived image) will
be reduced. Paswan and Sharma (2004) concluded that consumers’ assessment of a
country’s image affect consumer perceptions of a brand only if the consumer is actually
aware of and pays attention to the COO.
COO is capable of forming an association in the mind of consumers (Aaker, 1991).
Consumer stereotypes about a country form an association which in turn affects consumer
perceptions of products produced by the country. The extent to which consumers
recognize a brand’s COO is an indicator of the extent to which consumers really get to
know the brand. Lin and Kao (2004) and Pappu et al. (2005) conducted a study on the
effects of COO on BE. The results indicate that BE is indeed affected by the country from
which the brand originated. Paswan and Sharma (2004) conclude that COO perception
is capable of enhancing brand knowledge, which is composed of brand image and BA.
In marketing processes, communication plays an important role in increasing sales.
From the consumer side, communication helps them make purchasing decisions. Without
sufficient information, a consumer may find difficulty in making a decision. Before
purchasing a product or a particular brand a prospective customer will usually look for
information related to the product. Dodds et al. (1991) state that recommendations in the
buying process are important, because they can really affect whether or not a person buy
the product of interest. Such information can be provided by experts, family, or
colleagues, as well as potential customers, and is known as WOM (Ennew et al., 2000).
Marketing communication can be classified broadly into personal communication
and mass communication. In the content of marketing communication, WOM is
more influential than communication from other sources (such as Trusov et al.,
2009), because it is perceived as providing comparatively reliable information (Liu,
2006; Gruen et al., 2006) and is easily accessible thorough social networks (Liu, 2006).
Consequently, such communication is considered as highly persuasive through
substantial perceived credibility and trustworthiness (Godes and Mayzlin, 2004; Liu,
2006; Mayzlin, 2006).
Consumer behavior researchers are currently showing an interest in the COO
impact on BE. Many customers have stereotypes about the COO of a brand. Images
that customers associate with brand COO can function as quality signals and thereby
drive BE (Batra. et al., 2000; Paswan and Sharma, 2004; Zeugner-Roth et al., 2008;
Hamzaoui-Essoussi et al., 2011). This occurs because a strong image of COO is
considered as demonstrating competitive and comparative advantages that can
improve the image of products quality. Although consumer behavior researchers
currently display an interest in the role of COO in BE, the study generally focusses
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6. on how the dimensions of COO relate to different dimensions of BE or how these
relationships might change due to other variables.
Many researchers have focussed extensively on the role of WOM in marketing topics,
such as WOM as an important factor in consumer information searching, evaluation,
and buying processes (Webster 1988, 1991); WOM influences consumer attitudes toward
a firm/product (Xia and Bechwati, 2008; Söderlund and Rosengren, 2007; Sen and
Lerman, 2007; Kiecker and Cowles, 2001; Herr et al., 1991); WOM persuades consumers
to switch brands (Herr et al., 1991); and WOM influences expectations and perceptions
during the information search phase and influences behavior during the evaluation and
pre-selection of various service providers (Woodside et al., 1992).
However, to date, research on the role of WOM in BE is limited. WOM has the
potential to drive BE dimensions such as PQ. Some researchers (Danaher and Rust, 1996;
Fullerton and Taylor, 2002; Sweeney and Soutar, 2001) show that perceived service
quality and perceived service value, are positively associated with WOM transmission.
Gil et al. (2007) show that WOM within the family can affect the formation of BE;
Macdonald and Sharp (2000) consider the influence of WOM on BA. Murtiasih et al.
(2013) examine the indirect influence of WOM on the BE of car customers in the
Indonesian market.
The COO of a product may become a factor deployed by a customer in referring
product their friends or family (WOM). When a consumer is planning to buy a car, for
example, relatives or friends who understand cars or are car customers, may refer to
certain brand by saying “a car from this country [y] is a guarantee of quality.” This
refers to the role of COO, along with WOM, in influencing BE. Until now, no study has
examined the influence of COO and WOM jointly in the context of BE.
Based on the above-mentioned considerations, it was proposed the second hypothesis
is proposed:
H2. COO and WOM influence BE thorough BE dimensions.
Research method
Approach
The model developed in this study consists of six latent variables, which are
COO, WOM, BA, BAS, PQ, BL, and BE. The relationship between the variables is
shown in Figure 1.
Data collection instrument
Research instrument was a closed form questionnaire developed to measure all latent
variables. Likert scales ranging from “totally disagree” to “totally agree” were used.
BA
BL
PQ
BAS
COO
WOM
BE
Figure 1.
Research model
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7. To measure COO, it was assumed that consumers are familiar with the COO of the brand
they use. This variable was measured using six items developed by Yasin et al. (2007).
WOM was measured using 12 items. The measurement was adopted from Dumas
(2010), which used eight items previously by Harrison-Walker (2001). Harrison-Walker
(2001) concluded that WOM should include aspects of frequency and complimentarity.
BE consists of four dimensions, as proposed by Aaker (1991), namely, BL, BA, PQ, and
BAS. BA was measured using four items adapted from Yoo et al. (2000). Three other
items were adopted to measure BA, based on Yasin et al. (2007).
BAS indicators were developed from Yasin et al. (2007) and Yoo et al. (2000). Seven
items were originally developed by Yasin et al. (2007), which measure positive
associations, and two items to measure the strength of association (Yoo et al., 2000).
PQ measures subjective consumer assessment of the functionality and reliability of the
brand. Three items to measure PQ was adopted from Yoo et al. (2000), which was based
on Dodds et al. (1991), and one item based on research of Yasin et al. (2007).
BL was measured using six items, of which two were adopted from Yoo et al. (2000),
two from Chaudhuri (1995), and two from by Yasin et al. (2007). BE measurement was
adapted from Yoo et al. (2000) and Yasin et al. (2007). The complete questionnaire is
shown in Table I.
Respondents were asked to indicate their car brand and provide their preferred car
brand if different from their car actual brand. Anticipating respondent knowledge about
car brands, a list of car brands was provided prior to a manifest variables display which
measured COO, WOM, BA, BAS, PQ, BL, and BE. Respondents were also informed that
brand X on the questionnaire refers to the respondent is preferred car brand. In addition
to the above-mentioned latent variables, respondent profiles were also gathered.
Sampling
Respondents were car customers in Indonesia, particularly residents of Jabodetabek
( Jakarta, Bogor, Depok, Bekasi, and Tangerang regions). The Jabodetabek population,
based on the national census of 2010 is 27,924,427. Not all car customers in Jabodetabek
had an equal chance of being a respondent, as the study was limited to those who had
bought two cars or more and aged between 20 and 70. However, it is difficult to identify
car customers with two or more car purchases in the Jabodetabek regions. And from
the point of view of generalization, the sample being population representative is not
critical for a behavioral consumer study. Considering these two facts, convenience
sampling, using a non-probability sampling technique, was deployed. A total of 389
questionnaires were distributed and satisfactorily completed.
Data management and analysis
Prior to questionnaire distribution, validity, and reliability tests were performed.
The validity test was intended to check the internal validity of the instrument.
For this purpose, questionnaires were distributed to 20 car customers. A validity test
was performed using correlations. With a significance level of 5 percent, three items
on BAS, and four on WOM were found not to be valid. Cronbach’s a was used
to test reliability and the coefficient was 0.89. The standard cut off point for the
Cronbach coefficient is 0.7; the greater the number, the better the reliability. Thus the
developed questionnaire was reliable for use as the research instrument. Table I
provides a summary of valid items for each latent variable and which were further
used as the research instrument. Car brand X in the questionnaire meant the preferred
car of the respondent.
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8. Responses to the questionnaire were coded to 1 (totally disagree) to 5 (totally agree).
Using structural equation modeling (SEM) software, data screening was performed.
Prior to model analysis, a data adequacy test was performed with the Kaiser-Meyer-Olkin
(KMO) and Bartlett methods. The results enabled us to proceed to model analysis, with the
KMO 40.5 and Bartlett’s test of significance being o0.05. For these data, the KMO value
was 0.957 and Bartlett’s test of significance was 0.000.Thus, the sample was adequate for
further analysis using SEM.
Country of origin (COO) 1. Country image in terms of automotive innovation
2. Country image in terms of high technology
3. Country image in terms of design competence
4. Country image in terms of good product process quality
5. Country image in terms of prestige
6. Country image in terms of developing country
Brand awareness (BA) 1. Capable of remembering car X symbol
2. Recognize car X among other competitors
3. Be aware of car X presence
4. Give own opinion of car X brand
Brand association (BAS) 1. Capable of retrieving car X characteristics
2. Associating car X brand with dynamic properties
3. Associating car X brand with high technology use in production
4. Associating car X brand with innovativeness characteristics
5. Associating car X brand with uniqueness
6. Associating car X brand with its prestige
Perceived quality (PQ) 1. No doubt about quality of car X
2. Customer belief their car X is high quality
3. Customer belief in reliability of car X
4. Customer belief that management always ensure car X quality
Brand loyalty (BL) 1. Always choose car brand X as the first choice
2. Want to choose car brand X when purchasing a car
3. Consider self as loyal to car brand X
4. Feeling disposed to pay higher price for car brand X although other
brands have similar characteristics
5. Would not shift to another brand when car brand X available on
showroom
6. Will re-think repeatedly about buying another brand even if they have
similar characteristics
Brand equity (BE) 1. Make sense to buy car brand X although other brands resemble car
brand X characteristics
2. Make sense to buy car brand X although other brands have similar
characteristics
3. Make sense to buy car brand X instead of any other brands even if they
have the same quality
4. Make sense to buy car brand X instead of any other brands even if they
are in the same price
5. If other brands are not different from car brand X in any way, it seems
smarter to buy car brand X
Word of mouth (WOM) 1. People talk in detail about when providing car brand X
2. Many people recommended car brand X
3. I only hear positive things about car brand X
4. No one warned me of disadvantages when deciding to purchase car
brand X
5. I got recommendations from friends/family/experts to buy car brand X
6. I never heard negative things about car brand X
Table I.
Research instrument
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9. The respondent profile was depicted using descriptive statistics. Research hypotheses
were validated using confirmatory factor analysis (CFA).
Result and discussion
Respondent profiles
Car customers are generally adults. Although we were concerned with respondent
homogeneity, a small degree of nuisance due to the heterogeneity of respondents, could
not be avoided. Thus, presenting the respondent demography is important. Table II
shows the respondent profiles based on demography.
BA, BAS, PQ, and BL influence on BE
Goodness of fit statistics for the proposed model, based on CFA, is shown in Table III.
It was apparent that the proposed model had a good fit to the data collected.
The standardized solution for the model is shown in Figure 2.
Let’s begin with the first hypothesis which refers to BA, BAS, PQ, and BL influence
on BE. Based on Figure 2, the greater the consumer awareness of and associations with
the brand, as well as the perceptions of quality, the higher the BE. Similarly, a higher
degree of BL drives a brand to a higher level of BE. Among four of the BE dimensions,
BL yielded the strongest contribution to forming BE. BL is evidently a key construct in
explaining BE (Yoo et al., 2000; Yasin et al., 2007).
The effect of BA on BE was validated and yielded a factor loading of 0.08. This
result confirms previous research (such as Keller, 1993; Jara and Cliquet, 2012). The role
of BA in BE depends on the level of consumer awareness obtained. Similarly, for the
Age
(years) % Education %
Marital
status % Occupation %
Monthly income
(IDR millions) %
24-30 11 Doctorate 6 Married 94 Private 61 1-less than 3 1
31-40 37 Master 23 Single 5 Public staff 14 3-less than 6 8
41-50 37 Diploma 21 Widow 2 Entrepreneur 8 6-less than 9 66
51-60 15 Bachelor 52.4 Professional 3 9-less than 12 18
More than
60 1 High school 0.6
Government
enterprise staff 13 12 or above 7
Ethnicity ( %)
Acehnese 2 Minang 4 Javanese 69 Chinese 2
Bataknese 4 South Sumatera 2 Sundanese 12 Ambonese 1
Melayu 1 Betawi 2 Maduranese 1
Table II.
Respondent profile
Test Cut point Result Description
w2
(df 220) 483.85
p value o0.05 0.09317 Good fit
Root mean square error (RMSEA) 40.08 0.017 Good fit
Goodness of fit index (GFI) p0.9 0.926 Good fit
Adjusted of goodness of fit index (AGFI) p0.9 0.883 Marginal fit
Normed fit index (NFI) p0.9 0.952 Good fit
Non-normed fit index (NNFI) p0.9 0.990 Good fit
Table III.
Goodness of fit statistics
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10. purchase of a car, the higher the car BA, the more dominant brand in the minds of
consumers, then the possibility of the brand being considered for purchase is also
greater. The increased awareness increases the likelihood that the brand will be
considered by consumers and will influence purchasing decisions. When consumer
awareness of a brand is high, the brand is well known and considered reputable.
BE driven by consumer associations with a product, contributes to the specific
brand image. According to Yoo et al. (2000), BAS are related to each other, and comprise
many ideas, episodes, events, and facts that make up a network of knowledge about the
brand. BE is formed as a result of consumer confidence in the brand, which can be
created by marketers, consumers themselves through direct experience with the
product, or through drawing conclusions based on an existing association. Similarly, in
the purchase of a car, positive consumer confidence in a car brand influences purchase
intentions and choice. This behavioral response has implications for BE. Intangible
qualities that consumers associate with a brand such as “innovative, distinctive,
dynamic, and prestige” are also regarded as BAS. Car brand identity can influence BAS
and subsequently BE.
PQ, as the third dimension of BE, related to a significant influence, with a factor loading
of 0.04. High PQ affects consumer choice, which in turn increases the BE. Consumer
perceptions of car quality are produced through perceptual processes involved in the
decision-making process. High quality perceptions occur when consumers recognize the
differences and benefits of a brand, compare to competing ones. This influences their
purchasing decisions and encourages them to choose the brand over competing ones.
BL is a vital component of BE. The results show that BL influences BE significantly,
with a factor loading of 0.89. As found by Atilgan et al. (2005), if customers are loyal
to a brand, although competes intensely with other brands which have similar
characteristics, and may even be superior, consumers continue to be loyal to their
preferred brand. This is also in accordance with Aaker (1996), that most of BE is
determined by the number of people who buy on a regular basis. The regular buyers
have tremendous value to the company, because they represent substantial revenue.
Role of COO and WOM on BE
As shown in Figure 2, WOM exhibited the strongest indirect effect on BE. The indirect
effect of COO on BE was only 0.214, compared to WOM at 0.879. Nevertheless, the
influence of COO on BE cannot be ignored.
The results demonstrate that the capability to enhance the image of COO
significantly increases the differential effect of brand knowledge on consumer
responses to the marketing of car brands. The effect of COO on BE confirms previous
studies (such as Batra et al., 2000; Paswan and Sharma, 2004; Zeugner-Roth et al., 2008;
BA
BL
PQ
BAS
COO
WOM
BE
0.482
0.178
0.238
0.188
0.692
0.884
0.871
0.886
0.078
0.021
0.035
0.885
Figure 2.
Factor loading
between variables
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11. Hamzaoui-Essoussi et al., 2011), in which images that customers associate with COO of
a brand can function as quality signals and thereby drive BE. A new insight from this
present study was that the COO effect is greater through BL than PQ. It was validated
that for customers, the car purchasing decision is based on the COO of the car. In fact,
all cars distributed in the Indonesian market are imported. Japanese cars dominate the
Indonesian car market with shares of 83.6, 83.3, 84.3, 83.4, and 81.0 percent, respectively,
for 2007, 2008, 2009, 2010, and 2011.
WOM influence on BE through BA, BAS, PQ, and BL was 0.879. This means that
the capability of management to enhance positive WOM significantly increases the
differential effect of brand knowledge on consumer responses to the marketing of car
brands. It was evident that WOM communication not only plays a considerable role in
influencing and forming consumer attitudes and behavioral intentions (Sen and
Lerman, 2007; Xia and Bechwati, 2008), but also influences BE.
Conclusions, managerial implications, and suggestions for further research
The results demonstrate that the greater the consumer awareness of associations with
the brand, as well as perceptions of quality, the higher the BE. Similarly, a high degree
of BL drives a brand to a higher level of BE. Among the four BE dimensions, it turns
out that BL was a key construct in explaining BE.
It also emerged that COO and WOM influence BE indirectly through BA, BAS, PQ,
and BL. WOM exhibited a greater influence. High BE certainly provides many benefits
for manufacturers, including a strong brand strengthening marketing programs in the
search for new customers, as well as maintaining loyal customers. High BE also
provides high profit margins for manufacturers, enabling them to set premium rates
and save promotion costs. Cars which have high BE maintain their customers, even
though competitor brands have the same or even superior characteristics or features.
The study has several important implications. The management of car manufacturers
with well known brands gains an advantage through product COO which has been
embedded in customers’ minds. This means that the company needs only maintain the
brands, once this state has been achieved. Although COO influences BE significantly,
WOM exhibited a stronger influence. This indicates that the management of car
manufactures should ensure that their product brand becomes a customer topic through
WOM. Company management should focus on factors which encourages customers to
talk positively their product.
Another important implication, stems from the fact that among BE dimensions, the
strongest contributor is BL. BL is a form of response or consumer attitude and a
psychological process ( Jacoby and Kyner, 1973), which shows consumer commitment
a positive assessment of the brand and to make repeat purchases (Mustafa, 1999).
Consumers who are loyal to the brand will not perform attribute evaluation, but simply
choose a brand that is familiar, because of positive feelings toward the brand. Positive
overall evaluation is most probably derived from past experience with the product
and brand name attributes (Keller and Moorthi, 2003). Subsequently, BL will
provide benefits, through sustainable profits, reduced marketing costs, increased
per-customer revenue growth, reduced operating costs, increased premiums, and
creation of competitive advantage.
The role of WOM in BE was clearly evident. WOM communication is nowadays
expanding to online media. Many consumers look for online product reviews
when gathering pre-purchase product information (Zhang and Tran, 2009; Zhu and
Zhang, 2010). Disappointed consumers often complain by writing on their negative
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12. experiences in social media such as Twitter, Facebook, etc. which are read by
thousands or even millions. Bambauer-Sachse and Mangold (2011) demonstrate
that negative online product reviews have considerably detrimental effects on
consumer-based BE and thus lead to a significant BE dilution. Moreover, they show
that even brands on which consumers have considerable knowledge are not immune
from such detrimental effects. Thus, management should be more aware of negative
WOM spreading online.
On avenue for future research is identifying the strongest COO. For example,
Indonesian car customers place car brands from USA and Europe as the top rank.
However, conversely, car brands from the USA and Europe are more expensive than
those from other countries. Hence, it is important to model the effect of COO on BE for
each COO or to use brand COO as a moderating variable in the same model as in this
research. Another challenge for future research is to evaluate whether a strong car brand
in the Indonesian market is immune to negative WOM, as shown by Bambauer-Sachse
and Mangold (2011), with respect to computer notebooks and digital cameras.
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About the authors
Dr Sri Murtiasih is a Doctoral Student at the School of Economics, Gunadarma University.
She is presently researching consumer behavior under the supervision of Dr Sucherly and
Dr Hotniar Siringoringo, MSc.
Professor Sucherly Sucherly is a Full Professor of Marketing at the University of Padjajaran
Bandung, Indonesia. He teaches and researches marketing and specialized in consumer behavior.
Dr Hotniar Siringoringo is an Associate Professor at the Gunadarma University, Depok,
Indonesia. She also teaches and specialized in consumer behavior. Dr Hotniar Siringoringo is the
corresponding author and can be contacted at: hotniars@staff.gunadarma.ac.id
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
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