The  Role  of      Social  Media  Marketing  Expenditure  On  Brand  Equity  and  its  five  dimensions

The  Role  of      

Social  Media  Marketing  Expenditure  

On  Brand  Equity  and  its  five  dimensions  

Dissertation for Advanced International Business and Management

(Dural degree of Groningen and Newcastle)

Student Name: Feidan Wang

Student Number: s2260239 (Groningen), 109164629(Newcastle)

Words count: 13, 564 words

Date: 30/11/2012

Abstract

Brand equity has been one of the hottest topics in the marketing field over the past two decades. Due to fierce competition, building brand equity can help maintain an enterprise’s competitive advantages and achieve the continuity of its core strategy. Recently, many scholars have begun to explore the impact of marketing strategy, such as advertising, promotion and other marketing strategies on brand equity. However, the study of the relationship between brand equity and the social media marketing expenditure is still very limited.

On the basis of the findings of a literature review, this study establishes a conceptual model describing the relationship between social media marketing expenditure and brand equity and its five dimensions which are: brand awareness, brand association, perceived quality, perceived value, and brand loyalty.

12 beverage brands were selected as the study object, and the main methods used to collect data were the questionnaire and interviews. 600 social media users were randomly chosen from the Chinese social media market which has the most social media users. After receiving 349 valid questionnaires out of the 600 distributed, the resulting data was analyzed with SPSS using correlation and regression.

perceived value. However, the social media marketing expenditure has less of an impact on perceived quality than on brand awareness, brand association, perceived value and brand loyalty.

Key words: social media, social media marketing expenditure, brand equity, brand awareness, brand association, perceived quality, perceived value, brand loyalty

Acknowledgments

Contents

2.1.1  The  concept  of  social  media...9  

2.1.2  The  development  of  social  media………..……….11  

2.1.3  The  features  of  Social  Media………..………12  

2.1.4  Types  of  social  media………..………15  

2.2  Social  Media  Marketing……….………..16  

2.3  Social  Media  Marketing  Expenditure………..………18  

2.4  Brand  equity………..………19  

2.4.1  Dimensions  of  Brand  Equity……….……….21  

2.4.1.1  Brand  awareness………...21  

2.4.1.2  Brand  association……….22  

2.4.1.3  Perceived  quality………..22  

2.4.1.4  Perceived  Value……….23  

2.4.1.5  Brand  loyalty………..24  

2.5  Brand  equity  and  dimensions  of  brand  equity……….24  

    2.6  Summary.  ……….  26  

3.  Conceptual  Models………..………27  

3.1  Social  Media  Marketing  Expenditure  and  Brand  Equity  and  its’  five  dimensions...27  

4.Methodology...31  

4.1  Methods……….………31  

4.1.1  Questionnaire……….……….…..……….31  

4.2  Measurements………...34  

4.2.1  Social  Media  Marketing  Expenditure………..……….34  

4.2.2  Dimensions  of  brand  equity………..……….35  

4.2.3  Overall  brand  equity………..……….36  

4.3  Control  variable………36  

4.3.1  Country………..……….36  

4.3.2  Industry………..………37  

4.4  Reliability  and  Validity……….38  

4.5  Model………..41  

5.  Findings………..42  

5.1  General  Information  of  Respondents………..42  

5.1.1  Respondents  Gender  and  Age………..……….42  

5.1.2  Respondents  education  and  job  background………..………43  

5.2  Results  of  hypothesis……….45  

5.3  Findings  from  interviews………49  

5.3.1  Increasing  expenditure  on  human  recourse………..………..49  

5.3.2  Content  development  as  major  expenditure  in  social  media  marketing……..……….51  

5.3.3  Quality  of  Social  media  service  linked  to  brand  perceived  quality……….………..51  

6.  Discussion……….53  

7.  Limitation  and  further  work  ………..65  

8.  Conclusion……….66  

  Reference     ………  ……….  68  

1．Introduction

1.1 Background

Brand equity has been one of the hottest topics in the marketing field over the past two decades. Due to fierce competition, building brand equity can help to maintain an enterprise’s competitive advantages and achieve continuity in its core strategy. Brand equity is generally considered as the added value that a brand name gives to the products (Farquhar, 1990). Brand equity can bring lots of benefits for both enterprises and brands. It can lead to higher loyalty for the brand and reduces the possibility of the brand being affected by competitive marketing, and meanwhile, it also enhances the willingness of consumers to pay a premium. Moreover, brand equity can support brands to improve the effectiveness of their marketing communications and brand extension strategies (Keller, 1998). Keller (2000) has further identified that brand equity has become one of the priority considerations in strategy decision-making. Therefore, the management of brand equity is gaining increasing attention amongst top managers in marketing.

and the effective delivery of items which customers really need. Therefore, the combination of brand equity and marketing strategy has become an important part of brand equity theory.

Recently, many scholars have began to explore the impact of marketing strategy, such as advertising, promotion, sports sponsorship, public relations and other marketing strategies on brand equity (Yoo et al, 2000; Hoeffler and Keller, 2002). However, the study of the relationship between brand equity and the expenditure of social media marketing is still very limited. In particular and to the knowledge of this researcher there has been no previous research about the relationship between expenditure in the new marketing platform, social media, and brand equity. Thus, this study is undertaken to examine the impact of social media marketing expenditure on brand equity and its five dimensions which are: brand awareness, brand association, perceived quality, perceived value, and brand loyalty.

short-term profitability such as by being more productive with stronger brands. (Rust et al, 2004)

The relationship between social media marketing and brand equity and its five dimensions are also worthy of research. Social media marketing can be considered as a new type of marketing and advertising, and can influence brand equity in many ways. Advertising on social media, establishing a public brand account or interacting with consumers can all enhance brand awareness and brand association of consumers and can impact on purchasing decisions (Cobb-Walgren et al., 1995). Moreover, social media marketing expenditure seems have an effect on other core dimensions of brand equity as well, such as perceived quality, perceived value, and brand loyalty.

1.2 Research Meaning

This study will be conducted from the consumer-based perspective in order to examine the relationship between social media marketing expenditure and brand equity. This study has both theoretical and practical meaning:

(2) From the practical view, the impact of social media marketing expenditure on different core dimensions can provide a reference to an enterprise’s social media marketing budget. To a certain extent, using the findings of this study, companies can find an effective way to make good use of social media to develop marketing strategy and brand equity, thus building a lasting competitive advantage.

1.3 Research structure

2.Literature Review

Chapter 2 presents the relevant literature review of this study. Section one describes the concepts and development of social media. Features and types of social media are also introduced. Section two and section three explain the social media marketing and its expenditure. Section four reviews the brand equity and its five dimensions which are: brand awareness, brand association, perceived quality, perceived value and brand loyalty.  

2.1 Social Media

Nowadays, individuals do not use the traditional ways of getting information, such as articles on newspapers, videos from televisions, etc with the same frequency as was done in the past. Instead they desire information from global platforms such as social media (Qualman, 2011).

Social media, also called new media, are platforms and tools which people use to share opinions, insights, experiences and perspectives. According to the Global Social Media Report (InSites Consulting，2011), 70% of the world's internet users access social media network platforms. The popularity of social media has already demonstrated its potential for marketing.

2.1.1 Concept of social media

Kaplan and Haenlein (2010) define social media in a teleological way as a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0. It allows the creation and exchange of user generated content. And from a more general perspective, social media is the network and connection by engaging customers in conversations through technology in order to create and exchange ideas (Blackshaw and Nazzaro, 2004).

Social media is the spread of information by numerous nodes (people) according to their profession, preferences, and opinions through internet communication tools such as blog, microblogging, Email, etc. Social media use its unique form to provide sharing, interactions and other services. It is the filtering of the media and the reproduction of information.

From the perspective of information dissemination, social media has a powerful information dissemination capability. The dissemination of information is based on a series of network communication tools and can overcome time and distance limitations. This can help to disseminate information with high quality and high speed.

and Faulds, 2009).

The continuous improvements in digital network technology are constantly creating new methods and channels to improve the exchange of information (Kaplan and Haenlein, 2010), such as the appearance of email, BBS (Bulletin Board System) and IM (instant messaging), etc. With the era of web2.0, exchanges information and communication between friends can be undertaken with a wide variety of platforms, such as the blog, mini-blog, which have emerged one after another. Through these platforms, the users can fully self-express and interact, and share content with friends better because the social media has more complete systems of personal information platforms and relationship management.

2.1.2  Development  of  the  social  media  

2.1.3  Features  of  Social  Media  

Social media is the new media with more people being actively involved in sharing and real social relations. It has the following features:

1) Relational

From contacting people through the use of the telephone to Facebook or Twitter, approaches to relationship management have gradually turned to using social media. The relationship is one of the core elements of social media, and social media is a relationship management system based on a personalized information platform, which users use to manage their online contacts (Qualman, 2010).

Compared to previous tools, social media undoubtedly has great advantages. Because of its digitized functions, the information through the network can be transferred and exchanged much more quickly compared to traditional media (Mangold & Faulds, 2009). Meanwhile, numerous nodes (people) on the network can interconnect using different information. This function is significant to relationship management: it provides a large database and connectivity which enables users to conveniently manage contacts and get to know each other better before they make formal contact (Gilbert et al, 2009).

recommendations made by social media, users can search for people across some of the areas that they want to contact via social media by sending an invitation to “add” new friends.

Therefore, social media is just like multi-functional intelligent management equipment for managing relationships. It provides great convenience to users to maintain their relationships.

2) Individuality

Social media has a significant feature, which is individuality (Mangold & Faulds, 2009). Social media fully demonstrates an individual's thoughts, ideas, and needs. From the aspect of its application, users can set platform templates by themselves. There are many individuality options in applications of social media, and users can set up their own platforms based on their individual preferences.

3) Efficient spread

One of the efficient spreading of social media is reflected in the high quality information spread (Agichtein et al., 2008). Valuable news on social media is spread quickly throughout the world while worthless information will be forgotten or only receive a small range of propagation (Kaplan and Haenlein, 2010).

Some information, which attracts people and gets reflection, will be frequently shown on users' home pages because of friends' recommendations. Information which is high quality is frequently shown on users' home pages by frequent sharing and recommending. Then, friends will extend this information or topic and share it with all their friends.

The efficient spread of social media is also reflected in its amazing spread speed (Asur & Huberman, 2010). The spread model of social media is “viral spread ” among users, in which information is spread from ten people to hundred or thousand and more (Shardanand and Maes, 1995). This spread model depends on users' multi-dimensional Internet social connections. Information spreads from one point to a line, then to a level and finally to the whole relative network.

4) Sharing

between users and all friends across the same platform. They can easily share information to their own home page, if they press the button, “I want to share”, which has already been set up. The sharing function of social media not only speeds up the information spread, but also makes connections among friends more convenient (Yu and Kak, 2012).

5) Aggregation

The aggregation of social media is very significant, because the information and contents of social media depend on the relationships between users. Users can learn about their friends' new information and can have continuous interaction with their friends (Kaplan and Haenlein, 2009a). They can change information without having direct communication. Even though the user as an individual can decide which social media he or she uses to publish personal information and provide status updates, users cannot make their friends use the same social media. Thus, once users have established their relationships with their friends on one social media, it is difficult for them to change their social media from one to others.

2.1.4  Types  of  social  media    

wikis, Q&A etc. (OECD, 2007; Derek et al, 2010; Kaplan and Haenlein, 2010; InSite Consulting, 2011; Yu and Kak, 2012). Users not only contribute content, but also participate in the dissemination and consumption of the content.

In agreement with the approach described in a previous study (InSite Consulting, 2011), the following 5 types of social media are the main platforms considered in this study: (1) Social Networks Services (e.g. Facebook); (2) Blogs (e.g. Blogger); (3) Microblogging (e.g. Twitter, Weibo); (4) Discussion forums (e.g. Yahoo); and (5) Video Sharing (e.g. YouTube).

2.2 Social Media Marketing

Social media provides a rapidly changing means of communication between enterprises and their customers (Kaplan and Haenlein, 2010). Compared to traditional modes of communication like E-mail or letters, social media as a cost-effective online marketing tool provides enterprises with a broader platform for the exchange of information. Products, brands or services are all discussed through this platform (Blackshaw and Nazzaro, 2004) which indicates that social media has become one of the most important platforms for marketing.

Social media marketing is a rapidly growing method for enterprises reaching their potential customers.

As a hybrid element of the promotion mix, social media connects companies and customers in word-of-mouth form. Enterprisers can talk to customers via social media such Facebook, MySpace, and Blogs more directly and efficiently than traditional communication tools (Mangold and Faulds, 2009). Mangold and Faulds (2009) further point out that social media can help customers to exchange ideas and their experience of the products. Results from Qualman (2011) suggest that people prefer trusting their peers rather than traditional advertisements.

Social media marketing can be regarded as the process of a company gaining attention through social media platforms by using various approaches to marketing. Different social media provides different social actions due to its functions. For example, Microblogging (e.g. Twitter) is designed to let people write and share short messages (usually limited to 140 words), while Social Network Services (e.g. Facebook）allows users to share updates, joining events and a variety of other activities.

Social Media has a group of users with a higher education background and is widely used in corporate marketing and communication activities (Burson Marsteller, 2011 ） . Therefore, it’s not surprising to find that more and more local and multinational companies are competing to invest in the tide of social media.

2.3 Social Media Marketing Expenditure

Any marketing actions will positively affect brand equity. Marketing expenditure is used for marketing actions, such as advertising, new product launches and service improvements (Rust et al., 2004). The social media marketing expenditure not only includes advertising but also the marketing promotion mix as well as human resources. In this study, expenditure is considered to be the general overall social media marketing expenditure.

According to the Gartner Group survey report, the revenue from social media amounted to $16.9 billion with an increase of 43.1% compared to the previous year. Corporate marketing expenditures revenue accounted for $8.8 billion while social game revenue accounted for $6.2 billion. This number is also close to eMarketer estimates, with eMarketer estimating that in 2012 the revenue for companies from marketing expenditures on social media would reach $7.7 billion and then $ 11.9billion in 2013.

research is more logistic and complete, in this study, perceived social media expenditure of companies is used.

2.4 Brand equity

The concept of brand equity was first seen in the advertising industry (Barwise, 1993). Due to the frequency of mergers and acquisitions in the 1980s, brand equity became an essential equity which aroused the attention of marketing managers and academics (Shocher and Weitz, 1988; Rangasamy et al, 1993). The increasingly fierce market competition also required enterprises to establish the long-term competitiveness of the brand in order to create value for both businesses and consumers.

A successful brand can enable enterprises to gain competitive advantages. Enterprises with high brand equity may have more competitive advantages, including creating customer loyalty, exploring opportunities, the flexibility of coping with pressure from competitors and creating barriers to prevent the entry of competitors (Farquhar, 1990). Brand equity creating value not only occurs by expanding the space of consumer brand choices or by enhancing the willingness of consumers to buy products, but it can also occur by providing sustainable competitive advantages to improve the effectiveness of marketing by enterprises (Aaker, 1991; Barwise, 1993; Farquhar, 1990; Keller, 1993).

products. The difference between products and brands is the key principles and core element for defining brand equity (Blackstone, 2000). However, due to the different perspectives of previous research, the definition of brand equity has not been unified (Keller, 1993; Lisa Wood, 2000). Aaker (1991) defines brand equity as the ability to increase or decrease the value of a product or service of a company. Keller (1993) proposed the concept of customer-based brand equity, which defines brand equity as customers’ different responses to brand marketing due to differing brand awareness. In addition, the concept of brand equity takes the impact of brand names on consumers into account (Aaker, 1991). Hence, products with the same features and functionality may have different degrees of brand equity (Rangaswamy, et al, 1993).

Although there are many different definitions of brand equity, these definitions are mainly from two perspectives, one is from the financial point of view, and the other is from the consumer behavior perspective. The financial perspective emphasizes the brand as the financial equity of the company (Farquhar, 1990; Simon and Sullivan, 1993); while consumer behavior perspective emphasizes consumers' perceptions of the brand and behavior (Keller, 1993; Aaker, 1996; Cobb-Walgren, et al, 1995).

2.4.1 Dimensions of Brand Equity

Scholars have put forward a variety of marketing variables and dimensions to describe and measure brand equity. Martin and Brown (1990) identify five brand equity dimensions: perceived quality, perceived value, brand image, brand trust, and commitment. Aaker (1991) suggests that brand equity includes brand awareness, brand association, perceived quality and brand loyalty. Later, Aaker (1996) added some new dimensions, including premium brand leadership, brand personality, organizational associations, market share, and perceived value etc. Keller (1993, 1998) proposed the dimension of brand knowledge which includes brand awareness and brand image. Netemeyer et al (2004) divide the dimensions of brand equity into two aspects: the core dimensions and non-core dimensions.

Based on the above brief literature review, this study focuses on the five consumer-based dimensions of brand equity which are (1) Brand awareness (2) brand association (3) perceived quality (4) perceived value (5) and brand loyalty.

2.4.1.1 Brand awareness

perceptions in the very same products. Keller (1998) suggests that brand awareness is based on brand familiarity. To build brand awareness, appropriate action steps can be taken, such as advertising, sponsorship, and public relations, etc.

2.4.1.2 Brand association

Aaker (1991) defines brand association as “any memory related to brand”. The linkage between memory and a brand is an abstract form, such as a way of life, a feeling, an action, etc. Aaker (1991) further points out that these brand-related mental associations could become the potential value of the brand. Keller (1993) believes that brand association plays a significant role in purchasing decisions and brand loyalty.

Brand association has a wide range of information sources. This information can be positive or negative, and will be changed due to any new experiences of the brand (Keller, 1998). A positive brand image should be established through marketing activities, which can enhance consumers’ brand associations (Keller, 1998).

2.4.1.3 Perceived quality

Keller (1993) points out that the perceived quality of a product is determined by the performance of the product as well as other relevant factors, including the speed of product delivery and installation, customer service and training, etc. Perceived quality is different from actual quality in that it is the feeling of consumers perceiving the brand's reliability.

Perceived quality is not only a special property of product, but also a judgment of telling the difference between brand and competitive products (Zeithaml, 1988). The perceived quality can help enterprises achieve differentiation in competition. It can also enhance the degree of support in the implementation of a brand extension strategy (Aaker, 1991).

2.4.1.4 Perceived Value

The perceived value is also considered as one of the core elements of brand equity (Aaker, 1996; Keller, 1993; Netemeyer et al, 2004). The perceived value is a judgment of perceived quality and product cost. The perceived value is not only limited to the cost price, but also reflected in the cost of consumers purchasing decision opportunities (Kotler et al, 2001).

The expectancy-value theory holds that the attributes and interests (including the perceived quality) lead to the perceived value judgments of different brands (Netemeyer et al, 2004).

2.4.1.5 Brand loyalty

The brand loyalty dimension is quite different from the other four dimensions because brand loyalty only comes from consumers' actual purchasing and usage experience. Brand awareness, brand association, perceived quality and perceived value can exist before actually buying, but brand loyalty can only be produced after buying and the repeat purchasing process in the future. Schreuer (2000) holds that although marketing communications can produce the consumers’ expectations of the brand; only the consumer experience can enhance or reduce their future expectations of the brand.

Consumers' brand loyalty is the most important element of brand equity. Brand loyalty is long-term repeated buying behavior. If consumers buy a brand not because of its brand name, but because of other reasons, then the brand equity is compromised (Aaker, 1991). In order to maintain the sustained growth of profits, the creation and consolidation of brand loyalty must be achieved.

2. 5 Brand equity and dimensions of brand equity

quality and brand loyalty (Aaker, 1991). Brand awareness and brand association together constitute the brand image. In some cases, only brand awareness is enough to cause the reflection of customer preferences.

In other cases, the strength, preferences or unique brand association all play a decisive role in different responses to the formation of brand equity. If consumers think the brand is no different from other brands, then the consumers will feel they are faced with no-name products. However, if the brand has significant and unique associations, consumers will have different responses (Keller, 1998). Therefore, brand awareness and brand association have a direct impact on brand equity.

Perceived quality is the subjective judgment of the overall performance of brand products while perceived value is the overall subjective consideration of purchasing the brand. Both of these factors affect consumers' purchasing decisions and the likelihood of repeat purchasing (Farquhar, 1990). Moreover, according to the theory of memory, perceived quality and perceived value can strengthen the role of brand awareness and brand association (Netemeyer et al, 2004). For example, if consumers form perceived quality and perceived value through experience, then it is natural that brand association will be strengthened. Therefore, a brand's perceived quality and perceived value have a strong correlation with brand equity.

2.6 Summary

Almost all literature believes social media as a cost-effective online marketing tool provides enterprises with a broader platform for the exchange of information which indicates that social media has become one of the most important platforms for marketing. Thus, it creates marketing space for promoting brand equity.

Although there are many different definitions of brand equity, these definitions are mainly from two perspectives, one is from the financial point of view, and the other is from the consumer behavior perspective. This study is undertaken from the consumer-based perspective to examine how social media expenditure impacts on brand equity, so we will adopt the consumer behavior perspective to define brand equity as the perceptions of utility that the brand name gives to the product.

Scholars have also put forward a variety of marketing variables and factors to discuses the impact on brand equity and its dimension. Therefore, our next step is to find the relationship between one of these factors, social media marketing expenditure, and brand equity and its dimension.

3. Conceptual Model

The purpose of this study is to explore the relationship between social media marketing expenditure and brand equity. Based on the literature review, it is assumed that social media marketing expenditure has a positive relationship with brand equity and its five dimensions. The conceptual model is shown following Figure 1:

(Figure1: The conceptual Model)

Social Media Marketing Expenditure and Brand Equity and its’

five dimensions

Any marketing actives that affect a consumer’s positive response to a brand are positively related to brand equity. Brand price, promotions and advertising will all Social  Media  Marketing  

affect the dimensions of brand equity (Yoo et al, 2000).

The goals of social media marketing expenditure are to promote sales, enhance communication between enterprises and customers and improve the brand equity of n enterprise. Social media marketing can be considered as a new type of marketing and advertising. Chitty et al (2005) describe advertising as the valued bank deposits of a brand. Thus, we believe that social media marketing expenditure has an impact on brand equity.

Marketing expenditures aimed to attract new customers by supporting product, promotion, and channel activities (Kao, et al, 2006). Social media marketing has many ways to influence the dimensions of brand equity. Expenditure on social media, establishing the public home page of brands and interacting with consumers can all enhance brand awareness and the brand association of consumers, and this will impact on purchasing decisions and brand equity (Cobb-Walgren, 1995).

Moreover, repeated exposure on social media (advertising, sharing, reviews, feedback, etc.) can increasing help the possibility of buying products and increase the habit of buying the products (Hauser et al, 1995). This further suggests that social media marketing expenditure can strengthen the brand association and buying habits, which positively lead to brand loyalty.

Therefore the following hypotheses are proposed:

H1: Social media marketing expenditure has a positive relationship with brand awareness.

H2: Social media marketing expenditure has a positive relationship with brand association.

H3: Social media marketing expenditure has a positive relationship with perceived quality.

H4: Social media marketing expenditure has a positive relationship with perceived value.

H5: Social media marketing expenditure has a positive relationship with brand loyalty.

H6: Social media marketing expenditure has a positive relationship with (customer-based) brand equity.

brand that consumers have, the more perceived quality and perceived value they will gain (Haeckel, et al, 2003). The purpose of social media marketing is to let consumers know about the brand and the products in order to bring the brand into the consumers’ minds. Social media marketing can directly generate brand awareness and brand association, however, perceived quality and perceived value will be produced after consumers’ have experienced the product.

Therefore the following hypothesis is proposed:

H7: Social media marketing expenditure has a greater impact on brand awareness and brand association than on perceived quality and perceived value.

Compared to other dimensions of brand equity, brand loyalty needs more marketing efforts to be established (Aaker, 1996), and therefore the following hypothesis is also proposed:

H8: Social media marketing expenditure has a greater impact on brand awareness, brand association, perceived quality and perceived value than on brand loyalty.

4.Methdology

This study uses a customer-based questionnaire and interviews as main researcher methods in order to fulfill the needs of the study. Questionnaires are mainly used to collect the data in order to test hypothesis while interviews aim to find more in-depth information related to hypothesis.

The subjects selected in this study are connected with beverages which are fast moving consumer goods. 12 brands were chosen for observations with 349 respondents being involved. To make the results more reliable and abundant, 3 staff from chosen 12 brand companies were interviewed with the focus of the interviews being on social media marketing.

The social media marketing country sample is taken from China because it is the country with the most social media users in the world. This study considers fast moving consumer goods because consumers are highly exposed to fast moving consumer goods and consumers will therefore have experience of these products. Thus, the consumers will have some judgment and feelings about brand equity and its dimensions.

4.1 Methods

complete the questionnaires which were focused on 12 beverage brands in terms of their social media marketing expenditure in China. The top 12 brands of Chinese beverages industry according to China Beverage Industry Association were chosen which are Mengniu, Yili, Wanglaoji, JDB, Pepsi, Coca-Cola, Red Bull, C-estbon, Robust, Sprite, Master Kong, and Wahaha.

The questionnaires used in this study all refer to the previous development of the brand equity scale design (Keller, 1993; Cobb-Walgren, 1995; Yoo et al, 2000; Netemeyer et al, 2004) with the Likert scale being used to rate the responses given by the study participants. The respondents were asked to provide their feelings and judgments for each of the questions, pointing out the extent to which they agree or disagree with a series of statements. Each scale had five choices, "1" means "strongly disagree", "2" means "partly disagree", "3" means, “do not disagree nor agree”, " 4 " means "partly agree" and "5" means “strongly agree".

600 questionnaires were distributed, with there being 50 questionnaires for each brand (Mengniu, Yili, Wanglaoji, JDB, Pepsi, Coca-Cola, Red Bull, c-estbon, Robust, Sprite, Master Kong, Wahaha). There were 349 responses to the questionnaire. There were 25-29 copies of questionnaire for most brands collect while Mengniu and Yili had more than 40 questionnaires returned.

(Yoo et al, 2000).

The main questionnaire was divided into two parts: (1) the first part is a single brand survey which is the main body of the questionnaire. The first step is to find out whether the respondents consume and know about the brand through social media (if not, they are not the candidates for research), followed by the brand’s perceived social media marketing expenditure, brand awareness, brand association, perceived quality, perceived value, brand loyalty and overall brand equity related statement and questions; (2) the second part is the general information of the respondents, including their gender, age, education background and occupation.

4.1.2  Interviews  

As questionnaires are mainly used to collect the data testing hypothesis, interviews aim to find more in-depth information related to hypothesis.

Three social media marketing staff from Mengniu, Jiaduobao, and Wahaha were interviewed. These three staff were all nearly 30 years old, one woman was from Mengniu and two men were from Jiaduobao and Wahaha. Their detailed knowledge of marketing helped to provide a deeper understanding of social media marketing in this research.

4.2 Measurements

23 questions were included in the questionnaire. There were 3 questions each which covered perceived social media marketing expenditure, brand awareness, brand association, perceived quality, perceived value and brand loyalty while there were 5 questions for overall brand equity. 7 scale items were used to identify the social media marketing expenditure and overall brand equity and its five dimensions.

Social media marketing expenditure refers to the scale lists proposed by Yoo et al (2000); Brand awareness and brand association refers to the scale lists proposed by Keller (1993) and Yoo et al (2000); the perceived quality and brand loyalty refer to the scale lists proposed by Yoo et al (2000) and Netemeyer et al (2004); the perceived value refers to the scale list proposed by Netemeyer et al (2004) and the overall brand equity refers to the scale lists proposed by Cobb-Walgren (1995) and Yoo et al (2000).

4.2.1  Social  Media  Marketing  Expenditure  

A number of studies have utilized marketing expenditure in their analysis (Balasubramanian and Kumar 1990; Zinkhan and Cheng 1994; Herremans et al. 2000; Mizik and Jacobson 2003). Generally, social media marketing expenditure is believed to be the actual expenditure on social media by firms. As this study is consumer-based research, the perceived social media marketing expenditure is used instead of actual social media marketing expenditure.

marketing expenditure exists while it is not possible for actual marketing expenditure to directly change consumer behavior (Yoo et al, 2000). Examples from previous research have shown that consumers cannot remember actual prices even at the moment they purchase an item (Dickson and Sawyer, 1990). In this case the consumers just encoded the price as “expensive” or “cheap” (Olson, 1977). Analogously, the perceived social media marketing expenditure rather than actual social media marketing expenditure has a more efficient and direct impact on consumer behavior and perceptions of brand equity and its five dimensions.

Therefore, the perceived social media marketing expenditure is used as the measurement which comes from 3 items of the questionnaire.

4.2.2  Dimensions  of  brand  equity  

As mentioned previously, the 5 dimensions of brand equity considered in this study are: brand awareness, brand association, perceived quality, perceived value and brand loyalty. Each dimension is given 3 items in the questionnaire.

proposed by Netemeyer et al (2004) (e.g. I am loyal to “X”).

4.2.3  Overall  brand  equity  

There are two perspectives that can be used to describe brand equity which are financial and consumer behavior. The financial perspective emphasizes the brand as the financial equity of the company (Farquhar, 1990; Simon and Sullivan, 1993),) while the consumer behavior perspective emphasizes consumers' perceptions of the brand and behavior (Keller, 1993; Aaker, 1996; Cobb-Walgren, et al, 1995). As this study adopts a consumer-based questionnaire, the consumer behavior perspective is taken as the basis for this research. The 5 given scale lists refer to Yoo et al (2000) (e.g. “If another brand has the same price and quality as X, it is smarter to purchase X”)

4.3 Control variable

This study identifies country and industry as two control variables.

The social media marketing country sample is taken from China because it is the country with the most social media users in the world. The industry sample chosen from China is the beverage industry because it’s one of the most active industries on social media marketing. (Sina, 2012).

4.3.1  Country    

513 million Internet users in China, the number of social media users has reached 300 million with an annual growth rate of 33.7% (Cindy Chiu et al, 2011; Burson Marsteller, 2011).

Amongst the social media available in China, Weibo which is a Chinese version of Twitter, is one of the world’s largest social media platforms. It has nearly 300 million users which suggests that almost every social media user in China has a Weibo account. Meanwhile, it is a mature social media marketing platform because more than 130,565 companies are already marketing on it (Sina, 2012).

4.3.2 Industry

The industry chosen from China in this study is the beverage industry while the brands choosing from the industry are: Mengniu, Yili, Wanglaoji, Jiaoduobao, Pepsi, Coca-Cola, Red Bull, C-estbon, Robust, Sprite, Master Kong, and Wahaha. Beverages are fast moving consumer goods, which can ensure that the questionnaire participants have an experience of the products.

The beverage industry in China is growing rapidly with an average annual growth rate of between 12%-15% (China Beverage Industry Association, 2010). With the increase of Chinese per capita income and improved living standards, there has been greater expenditure on beverages by Chinese people.

the largest share while tea drinks and protein drinks are gradually increasing.

The beverage industry in China has a large number of innovative products in the market, including carbonated tea, fruit drinks, composite fruit and vegetable juices, milk drinks, complex protein drinks as well as a variety of cereal beverages. "Cross-border" and "mix and match" drinks have become the main trends in new products over the past two years.

The beverage brands in this research are chosen from the top 12 companies in the Chinese beverage market (China Beverage Industry Association, 2010). They all have a reputation in the beverage industry.

4.4 Reliability and Validity

To ensure the consistency and accuracy of the questionnaires describing the hypotheses, the reliability and validity of the scale lists must be examined.

Step 1 Reliability Check. Reliability describes the consistency ratio of the scale if the measurement is repeated. The higher the correlation, the more reliable the scale lists are. In this study, we use the most widely used measures to test reliability which is Cronbach’s α. According to the recommendation of Nunnally (1978), if Cronbach’s α coefficient is below 0.35, the scale measurement should not be used. If Cronbach’s α coefficient ranges between 0.35 and 0.7, the scale measurement is acceptable; and if Cronbach’s α coefficient is higher than 0.7, the scale measurement is highly reliable.

Scale Scale Measurement α Social

Media Marketing Expenditure

1 The social media marketing expenditure of X is high

0.935 2 Compared with other beverage brands, the social media marketing

expenditure of X is high

3 The brand promotion activities of X are frequent on social media Brand

awareness

4 I’m familiar with “X”

0.896 5 When I think about beverage, “X” is the first brand come to my mind

6 I can separate X from other beverage brands Brand

association

7 I can clearly distinguish the features of X when it is mentioned

0.925 8 I can quickly remember the brand logo of X

9 I can quickly remember the package of X Perceived

quality

10 X has good quality

0.977 11 The quality of X reliable

12 The quality of X is stable Perceived

value

13 The products of X are good value for money

0.953 14 Considering with the price, X is more attractive for purchase

15 When I drink the products of X, I think they have add value Brand

loyalty

16 I am loyal to “X”

0.959 17 X is my first choice, when I buy beverage

18 I will not buy any other beverage, if I can buy X Overall

Brand Equity

19 “X” is popular

0.939 20. X has the good reputation

21 “X” is a brand which I can trust

22 I would select X even if I find another brand whose characteristics are not different from those of X

23 If another brand has the same price and quality as X, it is smarter to purchase X

(Table 1: Reliability of scale measurements)

measurements used in this study are in line with the content validity. Construct validity is used to verify whether the scale can really measure the variables. This research investigates the convergent validity of construct validity. It can be seen in Table 2 that the coefficients of the measurements as a result of the factor analysis are all above 0.8 (Table 2), which means that this research design scale has good validity.

Scale Measurements Social Media Marketing Expenditure Brand Awareness Brand Association Perceived Quality Perceived Value Brand Loyalty Overall Brand Equity 1 0.930 2 0.949 3 0.943 4 0.887 5 0.864 6 0.919 7 0.933 8 0.931 9 0.932 10 0.973 11 0.984 12 0.976 13 0.955 14 0.947 15 0.970 16 0.947 17 0.969 18 0.967 19 0.828 20 0.922 21 0.938 22 0.901 23 0.899

4.5 Model

This study use simple linear regression as main model:

! = ! + !" + !

Where, Y denotes one of the six constructed indexes, namely Brand Awareness, Brand Association, Perceived Quality, Perceived Value, Brand Loyalty and Overall Brand Equity; α is the constant term; β is the coefficient parameter; X represents the independent variable which is social media marketing expenditure; and finally ϵ  is the residual term of the regression equation.

Simple linear regression is a linear regression model analyzing a variable Y changes according to variable X. Scatter plot can reflect the relationship between two variables. The straight line drawn based on scatter plot can show the estimate trends of relationship. Although this model is simple and not surely perfect, it has been widely used with proven scientific basis (Cook and Weisberg, 2008).

5. Findings

5.1 General Information describing the Respondents

349 respondents completed the questionnaire with the gender breakdown shown in Figure 2.

Figure 2: Gender breakdown of the study respondents

The respondents in this study were aged from 18 to over 60. Those aged “18-25” years represented 51% of the total respondents. The second largest one group were those aged from “26-44” years old which is 34% of the total respondents. Respondents aged “45-60” years old represented 21 % while the “26-44” year old age group represents 13 percent of the population. Respondents from “over 60” years old only make up 2% (Figure 3).

47.0%   53.0%  

Respondents  Gender  

Figure 3: Age breakdown of the study respondents

5.1.2  Education  and  occupation  background  

Figure 4 describes the educational background of the respondents. The educational background in this study is classified into five types as follows: under bachelor, bachelor, master, PhD or above, and others.

Overall, “under bachelor” has the largest proportion, which accounts for 45% of the total respondents while “others” has the smallest percentage of 2%.

As can be seen from the pie chart, “under bachelor ”, which makes up 45% of the total number of respondents, is the most group active on social media, then next group is “ bachelor” with 38%, followed by “master”, with 14%; and finally come “ PhD or above” and “others”, with 1% and 2% respectively. It should be noted that the respondents with the higher education background accounted for 53% of the total respondents (bachelor, master and PhD or above).

51%   34%  

13%   2%  

Respondents    Age  

Figure 4: Breakdown of the Educational Background of the study respondents

Figure 5 shows the occupational background of the 349 respondents. “Others”, was reported as the largest occupational background group. “Students” was ranked second. Respondents from “administration”, “engineering, manufacturing and production”, “leisure, sport and tourism” and “retailing, buying and selling” each had 30-34 respondents. “Creative arts and design” accounted for 25 respondents while “Advertising, marketing and PR”, “Education”, “Financial management and accountancy”, “Human resources and employment” and “Information services” had 17, 12, 18, 13 and 16 respondents respectively. Only 6 people reported their occupation to be “Transport, logistics and distribution”. With respect to “Media, broadcasting and publishing”, “Scientific services” and “Social care and guidance work” there were 3 respondents respectively. However, no one reported being employed in “Healthcare” or “Management and statistics” occupations.

Figure 5: Occupational background of the study respondents

5.2 Hypotheses Testing

This section describes the data analysis using correlation analysis and regression analysis to test the study hypotheses. In the third chapter, on the basis of the literature review, 8 hypotheses were proposed which describe the relationship between social media marketing expenditure and brand equity and its five dimensions.

summation of all the variables for that scale. Summated scales are an approach to increase the reliability of the method in which several variables of the same concept are summated to a new variable (Hair et al, 1995).

For example, if the data describing the attitude of the respondents towards three statements about social media marketing expenditure are "1, 3, 5", then this informs the attitude towards the total social media marketing expenditure by summing to "9". The summations can only be done when a scale with high reliability and validity. Scales in this study have already passed the reliability and validity testing, so we can use the summated scales analysis with this data.

Through the use of the summated scales, each of the three scales of the social media marketing expenditure, brand awareness, brand association, perceived quality, perceived value and brand loyalty are summed to 6 variables while the overall brand equity of the five scales also summed into a variable.

No Hypothesis Results

H1 Social media marketing expenditure has a positive relationship with brand awareness.

Supported

H2 Social media marketing expenditure has a positive relationship with brand association.

Supported

H3 Social media marketing expenditure has a positive relationship with perceived quality.

Supported

H4 Social media marketing expenditure has a positive relationship with perceived value.

Supported

H5 Social media marketing expenditure has a positive relationship with brand loyalty.

Supported

H6 Social media marketing expenditure has a positive relationship with customer-based brand equity.

Supported

H7 Social media marketing expenditure has a greater impact on brand awareness and brand association than on perceived quality and perceived value.

Supported

H8 Social media marketing expenditure has a greater impact on brand awareness, brand association, perceived quality, and perceived value rather than on brand loyalty.

Partly Supported

Table 3: Results of Hypothesis

The positive relationship between social media marketing expenditure and the five dimensions. The hypothesized relationships between social media marketing expenditure and brand awareness, brand association, perceived quality, perceived value, brand loyalty were tested by using regression analysis.

positive relationship with brand awareness (Coefficients=0.794, p-value=0.00). The results also indicate that social media expenditure has a strong positive impact on brand association (Coefficients=0.783, p-value=0.00), perceived quality (Coefficients=0.666, p-value=0.00), perceived value (Coefficients=0.697, p-value=0.00) and brand loyalty (Coefficients=0.685, p-value=0.00).

The positive relationship between social media marketing expenditure and overall brand equity. Its not surprise that social media expenditure has a positive relationship with overall brand equity (Coefficients=1.18, p-value=0.00). As indicated in Table 4, social media expenditure has a greater impact on overall brand equity than on each of its five dimensions of brand awareness, brand association, perceived quality, perceived value, and brand loyalty

Varying impact of social media marketing expenditure on the five dimensions. The results here provide further evidence that social media marketing expenditure has a greater impact on brand awareness (Coefficients= 0.794, p-value=0.00) and brand association (Coefficients=0.783, p-value=0.00) than on perceived quality (Coefficients=0.666, p-value=0.00) and perceived value (Coefficients=0.697, p-value=0.00).

media expenditure does not have greater impact on perceived value than on the brand loyalty.

Table 4: Empirical results

5.3 Findings from the interviews

As questionnaires are mainly used to collect the data in order to test whether social media marketing expenditure positively related to brand equity and its five dimensions, in-depth interviews can explore the further information so that it can make the research beyond the surface. Three main findings are summarized from interviews: 1) Increasing expenditure on human recourse; 2) Content development as a major expenditure in social media marketing; 3) Quality of Social media service linked to brand perceived quality.

5.3.1 Increasing expenditure on human recourse

most significant point of difference is the information channels. In traditional media marketing, the information channels between the enterprise and the consumer are one-way in that the enterprise delivers information to the consumers. However the information channels between the enterprise and consumer in social media are bidirectional which means that the enterprise can receive feedback from consumers directly through the social media marketing platforms. Although this two-way communication can promote information exchange and communication between the enterprise and consumers, it increases the operating costs of enterprises in the social media marketing (Mengniu, Wanglaoji). In other words, the labor costs are increased in social media marketing.

5.3.2 Content development as a major expenditure in social media marketing The staff member from Mengniu said: “Previously, brand managers only needed to worry about brand information from traditional media such as television and newspapers, but now, brand managers also need to be concerned about social media, and think about whether they have enough contents shared in social media.”

The three companies in this study all focused on high-quality content for attracting consumer attention, promoting interaction and increasing brand loyalty. The purpose of traditional advertising often lies in promoting brand awareness or brand reproduction (association) while social media pays more attention to consumer participation in their brand contents. These contents can promote consumer interactions and their participation in brand storytelling.

5.3.3 Quality of Social media service linked to brand perceived quality

The customers cannot really feel the quality of branded products on social media although they perceive quality by perceiving social media services (Mengniu). Hence, social media service quality and the perception of the brand are linked to perceived quality.

enterprise ignores these complaints this is equivalent to brand “suicide” (Wahaha). This is just like an enterprise providing a customer service hotline that no one answers (and to make matters worse, the entire users on social media will be able to see that you disregard these problems).

The findings from interviews indicate that customers will psychologically link social media services to perceived quality. The better the social media services and the attitude of enterprise are, the better the perceived quality is. In other words, social media services can create the added value for perceived quality.

6.disscusion

Findings from last chapter prove that social media marketing expenditure has a positive effect on brand equity and its five dimensions. This chapter will combine the obtained information from questionnaires, interviews and literature reviews to explore and analyze the in-depth relationship between social media marketing expenditure and brand equity as well as its five dimensions.

Social media marketing expenditure and brand awareness. Social media marketing expenditure has a strong positive relationship with brand awareness as hypothesized at the start of this study. Marketing expenditure is aimed at attracting new customers by supporting product, promotion and channel activities (Kao, et al, 2006). Methods of social media marketing such as advertising, establishing a public home page of brands or interacting with consumers can all enhance brand awareness (Cobb-Walgren, 1995).

Obviously, the first step to create brand awareness is to make customers aware of the brand’s existence. The worst situation is for a brand to be completely ignored by consumers. Therefore allowing customers and potential customers to know who you are and understanding the significance of “what you represent” is very important. Thus, social media platforms are an important marketing location that helps brand awareness dissemination more effectively.

interviews in this study, some companies will employee specific people who are responsible for developing and creating brand information to arouse the consumers and encourage them to comment and share. The two characteristics of social media which are “Efficient spread” and “Sharing” are helpful in the promotion of brand awareness.

Social media marketing expenditure and brand association. As hypothesized, social media marketing expenditure has a strong positive relationship with brand association. Brand association is “any memory related to a brand” (Aaker, 1991). As brand association is an abstract form, such as a way of life, a feeling, etc., only when this kind of “feeling” is strong enough can brand association lead to the outcome of purchasing decisions. The information obtained from the interviews in this study show that a positive brand association should be established through social media marketing activities. The marketing activities can be in the form of interaction with consumers (fans) or launching competitions on social media. It is not surprising that the more expenditure there is on social media marketing activities, the more attention the brand will get. The more attention a brand receives, the greater the brand association that may be formed in the consumers’ (fans’) minds.

expenditure and perceived quality are positively correlated. The results from the findings in this study strongly support this positive relationship.

The perceived quality is the perception of the consumers regarding the overall quality or superiority of a product or service (Keller, 1998). Social media marketing may help spread indicators of quality including the performance, features, reliability, durability, convenience and style rapidly through social media. Not only will the performance of the product impact on consumers’ perceived quality, but the relevant factors such as the speed of product delivery, social media online service, etc., may also affect the perceived quality.

Perceived quality is different from actual quality. It is the feeling of the consumers towards the perceived brand reliability. To improve the perceived quality of a brand as a marketing goal, it is necessary to learn more about the previous customer feelings towards the product or service or idea. Then you can improve the customer perception towards the product quality through a variety of strategies. Only by improving the customers’ perceived quality of the brand (products) can this lead to the satisfaction of customers as well as increasing customer repeat purchasing.

Social media marketing expenditure and brand perceived value. Social media marketing expenditure is closely related to perceived value because perceived quality can explain 80% of the changes in the perceived value (Aaker, 1996). Hence, social media marketing expenditure is also positively related to perceived value as described by the findings in Chapter 5.

The perceived value is a judgment about the combination of the perceived quality and product costs. The perceived value is a tradeoff between what is paid and what is obtained when purchasing a brand (Kirmani and Zeithaml, 1993). In fact, consumers do not buy things, rather they buy their expectations. Consumers want to achieve a certain degree of customer value in the purchasing process. The core element of customer perceived value is the weight of perceived sacrifices and perceived benefits. This concept contains two meanings: First, the perceived value is personalized and individualized, as different customers for the same product or services may have a different perceived value; second, the perceived value represents a weight of “gain” and “cost”. Customers will make purchase decisions based on their perceived value, and this will not just depend on a single factor.

expenditure can help build the brand value to some extent and thus enhance the perceived value psychology.

Social media marketing expenditure and brand loyalty. Social media marketing expenditure is also positively related to brand loyalty which is in agreement with the findings in Chapter 5. Moreover, repeated exposure on social media (advertising, sharing, reviews, feedback, etc.) can help to increase the possibility of buying products and promote the habit of buying the products (Hauser et al, 1990). This further suggests that social media marketing expenditure can strengthen the brand association and buying habits, which positively leads to brand loyalty.

Social media marketing expenditure can increase brand loyalty which will bring many benefits to enterprises. Brand loyalty is conducive to brand expansion, because a satisfied customer will recommend the brand to others. In addition, brand loyalty enables companies to gain competitive advantages, such as brand loyalty which can help enterprises to build entry barriers.

product, and the quality of service, while the emotional experience is the subjective perception regarding awareness of the emotional state. Due to the features of social media, this provides more emotional experience which is crucial for brand loyalty.

Through interactive, advertising or marketing activities, social media provides customers with the experience of unforgettable emotion so that their emotional, physical, mental and even spiritual feeling may be enhanced. These feeling are not spontaneous rather they are created through the contacts and communications between enterprises and customers. In other words, interaction on social media platforms can optimize the customer emotional experience which can lead to customer brand loyalty.

“It is impossible to establish long-term brand loyalty suing traditional platforms while social media makes this possible” as reported by the staff member from Mengniu, “social media provides one-to-one and one-to-many opportunities and activities on this platform that are beneficial for brand loyalty.” However, brand loyalty represents long-term repeated buying behavior and the emotional experience should be formed over the long term. Thus, expenditure on improving these emotional experiences should be part of the budget.

Brand equity in this study is consumer-based rather than determined by corporate finances or accounting. Brand equity is the power of the brand that exists in the minds of consumers. When consumers show their preference for a product, by its very nature, this is positively related to brand equity.

Building brand equity on social media must include a clear concept of the target customer and establish the concept of “services only for selected people”. Corporations should concentrate their limited social media human resources and expenditure on daily operating and publishing high-quality contents to reach specific customer groups in order to establish a distinctive brand image through social media.

Due to active interactions, efficient communications, word-of-mouth marketing on social media, brand differentiation positioning will be gradually implanted in the long-term memory of consumers so that they will immediately think of the characteristics of certain brands once there is a demand. This is one outcome of brand equity.