Brand Management in Small to Medium-Sized
Enterprises in the Dutch service sector
By
Benno den Hartog
Rijksuniversiteit Groningen
Faculty of Economics and Business
Master Business Administration
Small Business & Entrepreneurship
Acknowledgments
This research is conducted as a part of the Master Business Administration – Small Business & Entrepreneurship, of the Rijksuniversiteit of Groningen.
I have learned much about branding by following and participating in the course Brand Management & Communication at the Rijksuniversiteit of Groningen in college year 2006-2007. The course was taguht by dr. K. J. Alsem. I found branding very interesting and I decided to dedicate my second Master Thesis to this subject. Last year I finished my Master Business Administration – Marketing Management and my Master Thesis was dedicated to Customer Lifetime Value (CLV). In my final college year 2007-2008 I studied the main differences between small to medium-sized enterprises (SMEs) and larger organization (LOs) mainly in the field course small business management and small business economics. The courses were taught by dr. C. H. M. Lutz, dr. M. J. Brand, and prof. dr. P. S. Zwart. Afterwards, I can conclude that I have benefited from the wisdom of the professors at the university I studied.
When I was searching for an interesting subject for my Master Thesis I found the article of Berthon, Ewing and Napoli (2008) performed in Australia. I decided to partly reproduce and repeat their study in the Netherlands. Furthermore, I decided to expand their study to the Dutch service sector, because of the fact that the experts’ view is that the execution of branding strategies may need adjustments to comply with specific service features (e.g. De Chernatony & Dall’Olmo, 1999; Berry, 2000; O’Cass & Grace, 2003). This is the final result of my performed research.
I would like to thank all the responding companies, and especially the people who actually participated in my research by filling in my questionnaire. Without their help I could not conduct and round off my research. I would also want to thank my girlfriend Désirée Staarman for her understanding and patience. Being able to spend more time with her is my chief reward from finishing my study.
Summary
An impressive body of brand management literature has emerged focusing almost exclusively on the critical activities involved in brand management for large, multinational brands with well-established brands and substantial marketing budgets. Small to medium-sized enterprises (SMEs) have been largely overlooked in the brand management literature. Therefore, the present study seeks to asses the nature and scope of brand management within an SME context in the Netherlands. This is why the present study can be partly viewed as a kind of reproduction of the study of Berthon, Ewing and Napoli (2008). Furthermore, it can be deducted from recent academic literature that service branding is significantly different compared to the traditional product-centered branding. In addition, the service-dominant economy challenges the product-centric nature of the traditional brand concept. The experts’ view is that the execution of branding strategies may need adjustments to comply with specific service features. For this purpose Berry (2000) introduced the Service-branding Model of service brand equity. Berry (2000) presents four ways, (1) dare to be different, (2) determine your own fame, (3) make an emotional connection, and (4) internalize the brand, in which service companies build strong brands. It can be expected that these four ways has implications for the extent to which service companies implement key brand management principles (BMPs). Specifically, it is expected that service companies implement certain key BMPs to a greater extent than product-centered companies. Therefore, the present study also seeks to identify the nature and scope of brand management within an SME context in the Dutch service sector by comparing such practices to those of larger organizations in the service sector. Furthermore, the present study also compares such practices of SMEs in the Dutch service sector to those of SMEs in other Dutch sectors. Specifically, the present study sought to first identify whether brand management principles (BMPs) employed by SMEs across various sectors varies to that of LOs and second, whether such differences extend to high- and low-performing SMEs.
their brand’s performance for each of those characteristics. The final sample of the present study consists 128 respondent companies.
The results indicate that there are certainly differences between SMEs and LOs in the Netherlands in the extent to which they implement key BMPs. It is remarkable that the results showed that SMEs are more geared toward basing the brand’s pricing strategy on consumer perceptions of value, because the right blend of product quality, design, features, costs, and prices is very difficult to achieve but well worth the effort. The result is even more remarkable considering the fact that LOs more frequent understand what the brand means to consumers in comparison with SMEs. It seems like LOs in the Netherlands do not always use this
knowledge effectively within the organization. This suggests that there is a potential for LOs to optimize their performance by basing more often the brand’s pricing strategy on consumer perceptions of value. The empirical results of the present study did not indicate significant differences between SMEs in the Dutch service sector and other Dutch sectors in the extent to which they implement key BMPs. This is surprising, because the experts’ view is that the execution of branding strategies may need adjustments to comply with specific service features. Furthermore, the empirical results of the present study did not indicate significant differences between SMEs and LOs within the Dutch service sector in the extent to which they implement key BMPs. The results suggest that LOs within the Dutch service sector implement those BMP dimensions to a smaller extent and are performing worse compared to LOs in the Netherlands in general. This suggests that LOs can learn from the brand
management practices of product-centered LOs in the Netherlands. Also very interesting for the purpose of the present study is the fact that the empirical results of the present study did not indicate significant differences between service companies and product-centered
companies in the extent to which they implement key BMPs. It can be concluded that the Service-branding Model of service brand equity of Berry (2000) is still not adequately integrated in practice in the Netherlands. This suggests that there is the potential for service companies, both SMEs and LOs, to optimize their performance by adopting and integrating the Service-branding Model of service brand equity of Berry (2000) in their brand
management activities. This should ultimately lead to an improvement of the ongoing performance of organizations.
performance advantage over rival by essentially getting back to the ‘branding basics: that is, understanding customers’ needs and brand perceptions, creating relevant and valued brands, supporting the brand consistently over time, effectively communicating the brand’s identity to internal and external stakeholders and creating a coherent brand architecture. Such activities are well noted in the literature as necessary for building and managing brand equity in the long term. In particular, this suggests that there is the potential for SMEs to optimize their performance by mirroring and adapting the brand management activities of their larger counterparts to their specific needs and circumstances. This should ultimately go some way toward contributing to the ongoing performance of organizations. This is also valid for SMEs in the Dutch service sector. Furthermore, the limitations of the present study are noted, and directions for future research are outlined.
Title Master Thesis: Brand Management in Small to Medium-Sized Enterprises in the Dutch service sector
Table of content:
CHAPTER 1 INTRODUCTION ...7
1.1 BRAND MANAGEMENT IN SMALL TO MEDIUM-SIZED ENTERPRISES...7
1.2 BRANDING SERVICES...9
1.3 STRUCTURE OF THE PRESENT STUDY...10
CHAPTER 2 LITERATURE REVIEW ...12
2.1 SME MARKETING MANAGEMENT...12
2.2 BRAND MANAGEMENT...14
2.2.1 Key brand management principles (BMPs) ...16
2.3 MANAGING BRANDS IN SMES...21
2.4 SERVICE BRANDING...23
2.4.1 Intangibility ...24
2.4.2 Heterogeneity...25
2.4.3 Inseparability...25
2.4.4 Service-branding model...26
2.4.5 Following axioms, propositions, and hypotheses ...30
2.5 PRESENT STUDY...32
CHAPTER 3 RESEARCH DESIGN...34
3.1 MEASURING INSTRUMENT...34
3.2 PROCEDURE...35
3.3 PLAN OF DATA ANALYSIS...36
3.4 RESPONDENTS...37
3.5 PROGRESS OF THE RESEARCH...38
CHAPTER 4 RESULTS...39
4.1 FIRST STAGE: RELIABILITY ANALYSIS...39
4.2 SECOND STAGE:INDEPENDENT SAMPLES T-TEST...41
4.2.1 Comparison of BMPs between SMEs and LOs...41
4.2.2 Comparison of BMPs between SMEs in the service sector and other sectors ...42
4.2.3 Comparison of BMPs between SMEs and LOs in the Dutch service sector ...44
4.2.4 Comparison of BMPs between service companies and product-centered companies ...45
4.3 THIRD AND FINAL STAGE:DISCRIMINANT ANALYSIS...47
4.3.1 BMPs difference among high- and low performing SMEs and LOs ...47
4.3.2 BMPs difference among high- and low performing SMEs and LOs in the Dutch service sector ...50
CHAPTER 5 CONCLUSIONS AND IMPLICATIONS ...54
5.1 CONCLUSIONS OF THE PRESENT STUDY...54
5.1.1 Conclusions regarding the comparison of BMPs between SMEs and LOs ...55
5.1.2 Conclusions regarding the comparison of BMPs between SMEs in the service sector and other sectors...56
5.1.3 Conclusions regarding the comparison of BMPs between SMEs and LOs in the Dutch service sector ...57
5.1.4 Conclusions regarding the comparison of BMPs between service companies and product-centered companies ...57
5.1.5 Conclusions regarding the BMP difference among high- and low-performing SMEs and LOs ...59
5.1.6 Conclusions regarding the BMP difference among high- and low-performing SMEs and LOs in the Dutch service sector ...60
5.2 LIMITATIONS OF THE PRESENT STUDY...61
5.3 DIRECTIONS FOR FUTURE RESEARCH...62
LITERATURE ...64
Chapter 1 Introduction
Every day we, as consumers, get confronted with brands like Marlboro, Microsoft, Coca Cola, IBM, Google, McDonald’s, Heineken, Disney, Nokia, Intel and many others. Brands
dominate the current street scene. According to the American Marketing Association (AMA), a brand is a ‘name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group sellers and to differentiate them from those of competition. More and more firms and other organizations have come to the realization that one of their most valuable assets is the brand names associated with their products or services (e.g. Low & Fullerton, 1994; Jobber, 2004; Ind & Bjerke, 2007). Brands are increasingly valuable assets and sources of differentiation and today brands play an integral part in marketing strategy (e.g. Lim & O’Cass, 2001; O’Cass & Grace, 2003 Grace & O’Cass 2005). In an increasing complex world, individuals and businesses are faced with more and more choices but seemingly have less and less time to make those choices (Keller, 2003). The ability of a strong brand to simplify consumer decision making, reduce risk, and set expectations is thus invaluable (e.g. Park, Jaworski & MacInnes, 1986; Aaker, 1991; Berry, 2000). Creating strong brands that deliver on that promise, and maintaining and enhancing the strength of those brands over time, is thus a management imperative (Keller, 2003). Therefore, the present study is conducted to identify the nature and scope of brand management practices in the Netherlands. The service sector is of special interest within the present study.
1.1 Brand management in Small to Medium-Sized Enterprises
The marketing literature has long recognized the strategic importance of effective brand management (e.g. Park, Jaworski & MacInnes, 1986; Low & Fullerton, 1994; Keller, 2003). Brand management can be defined as ‘the application of marketing techniques to a specific product, product line or brand (e.g. Kotler & Armstrong, 1996; Keller, 2003; Jobber, 2004). It seeks to increase the product’s perceived value to the customer and thereby increase brand equity (Kotler & Armstrong, 1996). Customer-based brand equity (CBBE model) is formally defined as the differential effect that brand knowledge has on consumer response on the marketing of that brand (Keller, 2003). Keller (2003) also states a brand is said to have
positive customer-based brand equity when consumers react more favorably to a product and
the firm (Keller, 2003; Jobber, 2004). In other words, the key to branding is that consumers perceive differences among brands in a product category (Keller, 2003).
The brand management literature suggests that organizations that direct their
managerial actions and practices toward development, acquisition, and leveraging of branded products and services will be better placed to see positive gains in performance (Hankinson, 2001; Noble, Sinha & Kumar, 2002). However, one notable major gap in the literature can be identified (Berthon, Ewing & Napoli, 2008). The brand management literature has focused almost exclusively on large, multinational brands (e.g. Krake, 2005; Abimbola & Vallaster, 2007; Berthon, Ewing & Napoli, 2008). In other words, small to medium-sized enterprises (SMEs) have been largely overlooked in the literature. The present study will built upon a quantitative definition of SMEs. The EU’s definition (European Commission, 2005) includes small scale (enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro) and independence (of a large company). Micro, small and medium-sized
enterprises (SMEs) play a central role in the European economy (European Commission, 2005). They are a major source of entrepreneurial skills, innovation and employment (e.g. You, 1995; Knight, 2000; Audretsch & Thurik, 2001). In the enlarged European Union of 25 countries, some 23 million SMEs provide around 75 million jobs and represent 99% of all enterprises (European Commission, 2005).
The fact that SMEs have been largely overlooked is surprising, given that SMEs constitute the vast (numerical) majority of organizations (e.g. You, 1995; Graham, 1999; Culkin & Smith, 2000). Could it be because SMEs typically lack the capabilities, marketing power, and other resources of larger organizations (Cohn & Lindberg, 1972; Knight, 2000)? Or do SMEs fail to realize that brands can in fact be established and maintained on relatively modest budgets (Aaker & Joachimstahler, 1999)? Even with constrained budgets, SME marketers can creatively manage and leverage the full potential of their brands (e.g. Aaker & Joachimstahler, 1999; Keller, 2003; Berthon, Ewing & Napoli, 2008). The question then becomes which brand management principles, practices, or philosophies are most amenable to SMEs (Berthon, Ewing & Napoli, 2008). To address the gap in the brand management
present study contributes further to the filling of the identified gap. In their study the authors suggest several salient avenues for future research in this area. It may be useful to identify how the nature and scope of brand management within SMEs differ across cultures and whether this leads to desirable performance outcomes (Berthon, Ewing & Napoli, 2008). The present study seeks to identify the nature and scope of brand management within an SME context in the Netherlands by comparing such practices to those of larger organizations to further address the gap in the brand management literature. This is why the present study can be partly viewed as a kind of reproduction of the study of Berthon, Ewing and Napoli (2008). 1.2 Branding services
Although there is extensive literature on services marketing not much of it addresses the issue of branding services (e.g. Berry, 2000; Moorthi, 2002; Brady, Bourdeau & Heskel, 2005). A significant amount of literature on services deals with measuring of delivering customer satisfaction (e.g. Carman, 1990; Parasuraman, Zeithaml & Berry, 1994; Jones & Suh, 2000). Another stream of literature deals with issues that relate to business success in services (e.g. Martilla & James, 1977; Keaveney, 1995; Sin & Tse, 2000). A fair amount of literature deals with the operational aspects of services (Chase, 1981; Larson, 1987). There is however not much literature on how to brand a service (Moorthi, 2002). Existing literature that deals with branding of services, directly or indirectly, will be reviewed in the next part of the present study. The services sector experienced a large increase in relative importance over the last years (e.g. Stough, Haynes & Campbell, 1998; Keith Robbins et al., 2000; Kwoka & White, 2001). The fastest-growing sectors of the modern economy are dominated by companies which are driven by service propositions and therefore there can be questioned whether marketers are now reaching the limits of product-centered branding (e.g. Maklan & Knox, 1997; Brodie, Glynn & Little, 2006; Klaus & Maklan, 2007). The well-documented trend of ‘servitisation’ will inevitable impact the traditional product-centered brand (Vandermerwe & Rada, 1988). SMEs represent a major share of employment in private employer firms in the service sector (Kwoka & White, 2001).
Ganesh, 2007). This is why it can be stated that branding had clearly become a competitive weapon for services (e.g. Berry, 2000; Lim & O’Cass, 2001; Keller, 2003). It can be deducted from recent academic literature that service branding is significantly different compared to the traditional product-centered branding (e.g. Berry, Carbone & Haeckel, 2002; Klaus &
Maklan, 2007), these differences will be discussed in paragraph 2.4. In addition, the service-dominant economy challenges the product-centric nature of the traditional brand concept (Berry, 2000; Brodie, Glynn & Little, 2006; Klaus & Maklan, 2007). Despite these facts, Berthon, Ewing and Berthon (2008) did not address these differences in their study, although service companies represent 50% of their sample. This is why the authors are possibly missing some valuable academic information. The inclusion of these differences, they are intensively addressed in paragraph 2.4, represents the academic added value of the present study. The present study seeks to identify the nature and scope of brand management within an SME context in the Dutch service sector by comparing such practices to those of larger organizations in the service sector. Furthermore, the present study also compares such practices of SMEs in the Dutch service sector to those of SMEs in other Dutch sectors. 1.3 Structure of the present study
In chapter 2 of the present study will all the relevant academic literature concerning brand management in both a SME context and service context be reviewed. The literature review starts with an outline of the characteristics of SMEs and some of the marketing challenges they face in paragraph 2.1. Afterwards, in paragraph 2.2, brand management in general will be discussed. Furthermore, the ten key brand management principles (BMPs) of Keller (2000, 2003) are outlined in subparagraph 2.2.1. In paragraph 2.3 will managing brands in SMEs be further explained. Service branding will be discussed in paragraph 2.4. This paragraph includes an outline of the characteristics of services and their implications for marketing management (especially branding). In this paragraph the service-branding model of Berry (2000) will be also explained. Furthermore, the axioms, propositions and hypotheses of the present study are presented in chapter 2. The research design of the present study will be discussed in the chapter 3 of the present study. In this chapter the measuring instrument is discussed in paragraph 3.1. The procedure of the present study will be explained in paragraph 3.2. Afterwards, in paragraph 3.3 the plan of data analyses is presented. In paragraph 3.4 the respondents of the present study will be described. Finally, the progress of the present study will be discussed in paragraph 3.5. Chapter 4 of the present study is dedicated to the
Chapter 2 Literature review
As indicated in chapter 1, in this chapter the relevant academic literature concerning brand management in both a SME context and service context is reviewed. This part of the present study commences in paragraph 2.1 with an outline of the characteristics of SMEs and some of the marketing challenges they face. Next paragraph 2.2 discusses brand management.
Furthermore, the ten key brand management principles (BMPs) of Keller (2000, 2003) are outlined in subparagraph 2.2.1. Afterwards, managing brands in SMEs is explained in paragraph 2.3. Service branding will be explained in paragraph 2.4. This paragraph includes an outline of the characteristics of services and their implications for marketing management (especially branding). Furthermore, in this paragraph the service-branding model of Berry (2000) will be explained.
2.1 SME marketing management
In most developed economies SMEs account for the vast majority of organizations (e.g. Graham, 1999; Culkin & Smith, 2000; Kwoka & White, 2001). Furthermore, SMEs contribute significantly to a country’s gross domestic product, national employment, and export performance (e.g. Acs & Audrtsch, 1990,Graham, 1999; Culkin & Smith, 2000). It has long been recognized that the management style, operations, and functions of SMEs are different from larger organizations (LOs) (e.g. Cohn & Lindberg, 1972; Knight, 2000;
Abimbola & Vallaster, 2007). While it has been argued that SMEs pose unique features which are different from traditional marketing in large firms (Carson & Cromie, 1990), several authors suggest integration of strategic management and marketing in SMEs (e.g. Carson & Cromie, 1990; Carson et al. 1995; Wong & Merrilees, 2005). SMEs often face resource constraints, both in terms of time and money, which result in many owner-managers adopting what could be described as a ‘survival mentality’ (Berthon, Ewing & Napoli, 2008). The SME owner-managers recognize the need to utilize their limited resources more effectively to compete with increasingly powerful competitors (Falemo, 1989; Welsch & Young, 1983). Compared to LOs, SMEs face many unique challenges, including the following three: (1) limited resources and lack of experience in conducting formal market research and
Several scholars have been quick to extol virtues of being small (Berthon, Ewing & Napoli, 2008). They point out that unlike the LOs, SMEs tend to be entrepreneurial, flexible, and innovative, which makes them more adept at serving specialist or niche markets and remaining responsive to customer needs (e.g. Cohn & Lindberg, 1972; Gilmore et al., 1999; O’Donnell et al., 2002). Furthermore, SMEs have more of an opportunity to get close to customers and obtain valuable feedback, which can then be used to provide them with a customized, value-added service (e.g. Gilmore et al., 1999; O’Donnell et al., 2002; Gassmann & Keupp, 2007). Research has shown that entrepreneurial SMEs have a greater ability to leverage marketing strategies for entering new product markets and coping with complex environments (e.g. Knight, 2000; O’Donnell et al., 2002; Hyvonen & Touminen, 2006). Entrepreneurial SMEs tend to exhibit a higher order level of organizational learning and are more adept at acquiring and utilizing marketing information than their nonentrepreneurial counterparts (e.g. Chaston, Badger & Sadler-Smith, 2001; Sadler-Smith et al., 2003; Hyvonen & Touminen, 2006).
In contrast, research has demonstrated that SMEs are more likely to experience problems in marketing, human resource management, and general business planning (e.g. Huang & Brown, 1999; Rutherford, Buller & McMullen, 2003). When combined with a lack of marketing expertise, difficulties arise in selecting suitable promotional media, designing content, conducting market research, and interpreting marketing information (e.g. Huang & Brown, 1999; Raymond, Brisoux & Azami, 2001; Keller, 2003). This is partly a result of limited financial, technological and managerial resources, lack of management information systems and concentration of decision-making with, more often than not, the owner-manager (e.g. Huang & Brown, 1999; Raymond, Brisoux & Azami, 2001; Rutherford, Buller & McMullen, 2003). Marketing tends to be more reactive, in terms of responding to customer needs, rather than proactive (e.g. Carson, 1985; Carson & Gilmore, 2000; O’Donnell et al., 2002). In addition, the study of Carson and Gilmore (2000) has shown as the business
develops, SME managers begin to experiment with different marketing techniques, acquiring experience and knowledge as time progresses and becoming more adept at accommodating those marketing practices that produce positive results for the organization.
the unique needs, circumstances and abilities of an individual SME (Carson & Gilmore, 2000; O’Donnell et al., 2002). Managers of SMEs tend to pursue those activities they believe will deliver the greatest benefit to the organization and most effectively utilize the resources that are available, because they face resource constraints, both in terms of time and money (Gilmore et al., 1999; Carson & Gilmore, 2000). Furthermore, most marketing principles are adapted to suit the unique situation of an SME, with many owner/managers relying largely on their intuition, experience or judgment to make such decisions (Carson & Gilmore, 2000). 2.2 Brand management
Building and properly managing brand equity has become a priority for companies of all sizes, in all types of industries, in all types of markets (Keller, 2000; Jobber, 2004). After all, from strong brand equity flow customer loyalty and profits (e.g. Aaker, 1991; Keller, 2000, 2003). The rewards of having a strong brand are clear (e.g. Keller, 2000; Moorthi, 2002; Klaus & Maklan, 2007). They are presented in figure 2.1.
Figure 2.1. Marketing Advantages of Strong Brands (source: Keller (2003))
The basic premise of the CBBE model is that the power of a brand lies in what customers have learned, felt, seen, and heard about the brand as a result of their experiences over time (Keller, 2003). In other words, the power of a brand lies in what resides in the minds of the customers (e.g. Aaker, 1991; Kotler & Armstrong, 1996; Keller, 2003). The challenge for marketers in building a strong brand is ensuring that customers have the right type of experiences with products and services and their accompanying marketing programs so that the desired thoughts, feelings, images, beliefs, perceptions, opinions, and so on become linked to the brand (e.g. Keller, 2003; Alsem, 2005; Percy & Elliot, 2005). From the perspective of
• Improved perceptions of product performance • Greater loyalty
• Less vulnerability to competitive marketing actions • Less vulnerability to marketing crises
• Larger margins
• More inelastic consumer response to price increases • More elastic consumer response to price decreases • Increased marketing communications effectiveness • Greater trade cooperation and support
• Possible licensing opportunities
the CBBE model, brand knowledge is the key to creating brand equity, because it creates the differential effect that drives brand equity (Keller, 2003). Keller (2003) conceptualizes brand knowledge as consisting of a brand note in memory with a variety of associations linked to it. In particular, brand knowledge can be characterized in terms of two components: brand awareness and brand image (e.g. Rust, Zeithaml & Lemon, 2000; Keller, 2003; Alsem, 2005). Brand awareness is related to the strength of the brand node or trace in memory, as reflected by consumers’ ability to identify the brand under different conditions (e.g. Aaker, 1991; Rust, Zeithaml & Lemon, 2000; Keller, 2003). Brand awareness consists of brand recognition and brand recall performance (Keller, 2003). Brand recognition relates to consumers’ ability to confirm prior exposure to the brand when given the brand as a cue (e.g. Porter & Claycomb, 1997; Keller, 2003; Krohe, 2007). In other words, brand recognition requires that consumers can correctly discriminate the brand as having been previously seen or heard (Keller, 2003). Brand recall relates to consumers’ ability to retrieve the brand form memory when given the product category, the needs fulfilled by the category, or a purchase or usage situation as a cue (e.g. Alsem, 2005; Percy & Elliot, 2005; Matthes, Schemer & Wirth, 2007). In other words, brand recall requires that consumers correctly generate the brand form memory when given a relevant cue (Rust, Zeithaml & Lemon, 2000; Keller, 2003). For this reason, brand recall is critical for service brands: consumers must actively seek the brand and therefore be able to retrieve it from memory when appropriate (Keller, 2003). Brand image has long been recognized as an important concept in marketing (Gardner & Levy, 1955). Brand image can be defined as perceptions about a brand as reflected by the brand associations held in
consumer memory (e.g. Newman, 1957; Rust, Zeithaml & Lemon, 2000; Keller, 2003). In other words, brand associations are the other informational nodes linked to the brand node in memory and contain the meaning of the brand for consumers (e.g. Berry, 2000; Rust,
Zeithaml & Lemon, 2000; Keller, 2003). Associations come in all forms and may reflect characteristics of the product or aspects independent of the product itself (e.g. Aaker, 1991; Rust, Zeithaml & Lemon, 2000; Keller, 2003).
Customer-based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable, and unique brand
category (e.g. Aaker, 1991; Kotler & Armstrong, 1996; Alsem, 2005). In other words, the key to branding is that consumers must not think that all brands in the category are the same (Keller, 2003). Thus, establishing a high level of brand awareness and a positive brand image in consumer memory – in terms of strong, favorable, and unique brand associations –
produces the knowledge structure that can affect consumer response and produce different types of customer-based brand equity (Rust, Zeithaml & Lemon, 2000; Keller, 2003). It is important that organizations initially focus their efforts on creating an appropriate brand image that has a niche in the market place (Berthon, Ewing & Napoli, 2007). Marketing mix elements should be used to operationalize the concept and communicate this to the target audience (Park, Jaworski & MacInnes, 1986; Percy & Elliot, 2005). As the brand (and organization) grows, managerial emphasis should shift toward making a brand memorable, ensuring that positive brand associations can readily be recalled by consumers and reinforcing the link between a brand (image) and other products within a company’s portfolio (e.g. Park, Jaworski & MacInnes, 1986; Farquhar, 1989; Keller, 2003). Regardless of whether an organization is comprised of a singular or multiple brands, it is necessary that marketing efforts be directed toward establishing and maintaining a positive brand image in the minds of key stakeholders (e.g. Farquhar, 1989; Rust, Zeithaml & Lemon, 2000; Berthon, Ewing & Napoli, 2007).
2.2.1 Key brand management principles (BMPs)
Keller (2000) identified the ten characteristics that the world’s strongest brands share and constructed a brand report card – a systematic way for managers to think about how to grade their brand’s performance for each of those characteristics. The brand report card can help to identify areas that need improvement, recognize areas in which the brand is strong, and learn more about how a particular brand is configured (e.g. Keller, 2000, 2003; Mandour, Bekkers & Waalewijn, 2005). This subparagraph is completely based on the contributions of Keller (2000, 2003). The reasons to use the brand report card of Keller (2000, 2003) as the
a brand, it is not easy to keep in perspective all the parts that affect the whole. The world’s strongest brands share these ten key brand management principles (BMPs):
BMP 1: Managers understand what the brand means to consumers
Managers of strong brands appreciate the totality of their brand's image- that is, all the different perceptions, beliefs, attitudes, and behaviors customers associate with their brand, whether created intentionally by the company or not. As a result, managers are able to make decisions regarding the brand with confidence. If it's clear what customers like and don't like about a brand, and what core associations are linked to the brand, then it should also be clear whether any given action will dovetail nicely with the brand or create friction. Keller (2000, 2003) proposes that successful brands have formulated a brand mantra, which is a short expression of the most important aspects of a brand and its core brand values.
BMP 2: The brand is properly positioned
Brands that are well positioned occupy particular niches in consumers' minds. They are similar to and different from competing brands in certain reliably identifiable ways. The most successful brands in this regard keep up with competitors by creating points of parity in those areas where competitors are trying to find an advantage while at the same time creating points of difference to achieve advantages over competitors in some other areas. Points of parity can be defined as those associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in two basic forms: category and competitive. Category points of parity are those associations that consumers view as being necessary to be a legitimate and credible offering within a certain product or service category. Competitive points of parity associations are those associations designed to negate
competitors’ points of difference. Points of difference can be defined as strong, favorable, and unique brand associations for a brand. Of course, branding isn't static, and the game is even more difficult when a brand spans many product categories. The mix of points of parity and point of difference that works for a brand in one category may not be quite right for the same brand in another.
BMP 3: Customers receive superior delivery of the benefits they value most
tangible and intangible factors, create an attractive whole. In some cases, the whole is not even something that customers know or can say they want.
BMP 4: The brand take advantage of the full repertoire of branding and marketing activities available to build brand equity
At its most basic level, a brand is made up of all the marketing elements that can be
trademarked- logos, symbols, slogans, packaging, signage, and so on. Strong brands mix and match these elements to perform a number of brand-related functions, such as enhancing or reinforcing consumer awareness of the brand or its image and helping to protect the brand both competitively and legally. Managers of the strongest brands also appreciate the specific roles that different marketing activities can play in building brand equity. They can, for example provide detailed product information. They can show consumers how and why a product is used, by whom, where, and when. They can associate a brand with a person, place, or thing to enhance or refine its image. Consumers may ask or even pressure retailers to stock and promote manufacturers’ products. By devoting marketing efforts to the end consumer, a manufacturer is said to employ a pull strategy, since consumers use their buying power and influence on retailers to ‘pull’ the product through the channel. Alternatively, marketers can devote their selling efforts to the channel members themselves, providing direct incentives for them to stock and sell products to the end consumer. This approach is called a push strategy, since the manufacturer is attempting to reach the consumer by ‘pushing’ the product through each step of the distribution chain. When a brand makes good use of all its resources and also takes particular care to ensure that the essence of the brand is the same in all activities, it is hard to beat.
BMP 5: Marketing and communications efforts are seamlessly integrated. The brand communicates with one voice
Maintaining a strong brand means striking the right balance between continuity in marketing activities and the kind of change needed to stay relevant. By continuity, Keller means that the brand's image doesn't get muddled or lost in a cacophony of marketing efforts that confuse customers by sending conflicting messages. An important consideration is that the
BMP 6: The brand’s pricing strategy is based on consumer perceptions of value
The right blend of product quality, design, features, costs, and prices is very difficult to achieve but well worth the effort. Many managers are woefully unaware of how price can and should relate to what customers think of a product, and they therefore charge too little or too much. Value pricing should not be adopted at the expense of essential brand-building
activities.
BMP 7: The brand uses appropriate imagery to support its personality
Brand equity must be carefully constructed. A firm foundation for brand equity requires that consumers have the proper depth and breadth of awareness and strong, favorable, and unique associations with the brand in their memory. Too often, managers want to take shortcuts and bypass more basic branding considerations- such as achieving the necessary level of brand awareness -in favor of concentrating on flashier aspects of brand building related to image.
BMP 8: The brand is innovative and relevant
In strong brands, brand equity is tied both to the actual quality of the product or service and to various intangible factors. Those intangibles include ‘user imagery’ (the type of person who uses the brand), ‘usage imagery’ (the type of situations in which the brand is used), the type of personality the brand portrays (sincere, exciting, competent, rugged), the feeling that the brand tries to elicit in customers (purposeful, warm), and the type of relationship it seeks to build with its customers (committed, casual, seasonal). Without losing sight of their core strengths, the strongest brands stay on the leading edge in the product arena and tweak their intangibles to fit the times. These days, images can be tweaked in many ways other than through traditional advertising, logos, or slogans. ‘Relevance’ has a deeper, broader meaning in today’s market. Increasingly, consumers’ perceptions of a company as a whole and its role in society affect a brand’s strength as well.
BMP 9: For a multiple, multibrand company, the brand hierarchy and brand portfolio are strategically sound
boys, for example, or be used for one type of product. Brands at each level of the hierarchy contribute to the overall equity of the portfolio through their individual ability to make consumers aware of the various products and foster favorable associations with them. At the same time, though, each brand should have its own boundaries; it can be dangerous to try to cover too much ground with one brand or to overlap two brands in the same portfolio.
BMP 10: The company has in place a system to monitor brand equity and performance
Strong brands generally make good and frequent use of in-depth brand audits and ongoing brand-tracking studies. A brand audit is an exercise designed to assess the health of a given brand. Typically, it consists of a detailed internal description of exactly how the brand has been marketed (called a "brand inventory'') and a thorough external investigation, through focus groups and other consumer research, of exactly what the brand does and could mean to consumers (called a "brand exploratory"). Brand audits are particularly useful when they are scheduled on a periodic basis. It's critical for managers holding the reins of a brand portfolio to get a clear picture of the products and services being offered and how they are being marketed and branded. It's also important to see how that same picture looks to customers. Tapping customers' perceptions and beliefs often uncovers the true meaning of a brand, or group of brands, revealing where corporate and consumer views conflict and thus showing managers exactly where they have to refine or redirect their branding efforts or their marketing goals. Tracking studies can build on brand audits by employing quantitative measures to provide current information about how a brand is performing for any given dimension. Generally, a tracking study will collect information on consumers' perceptions, attitudes, and behaviors on a routine basis over time; a thorough study can yield valuable tactical insights into the short-term effectiveness of marketing programs and activities. Whereas brand audits measure where the brand has been, tracking studies measure where the brand is now and whether marketing programs are having their intended effects.
implementing brand strategies and tactics and documents proper treatment of the brand's trademark- the rules for how the logo can appear and be used on packaging, in ads, and so forth. These managers also assemble the results of their various tracking surveys and other relevant measures into a brand equity report, which is distributed to management on a monthly, quarterly, or annual basis. The brand equity report not only describes what is happening within a brand but also why.
The value of balance
Building a strong brand involves maximizing all ten these ten key brand management principles (BMPs). And that is, clearly, a worthy goal. But in practice, it is tremendously difficult because in many cases when a company focuses on improving one, others may suffer. The trick is to get a handle on how a brand performs on all ten attributes and then to evaluate any move from all possible perspectives. One would think that monitoring brand performance wouldn't necessarily be included in the equation. But even effectively monitoring brand performance can have negative repercussions if you just go through the motions or don't follow through decisively on what you've learned. It is important to recognize that in strong brands the top ten traits have a positive, synergistic effect on one another; excelling at one characteristic makes it easier to excel at another.
2.3 Managing brands in SMEs
completely overlooked by researchers (e.g. Krake, 2005; Wong & Merrilees, 2005; Berthon, Ewing & Napoli, 2008).
The study of Berthon, Ewing and Napoli (2008) was the first which examined the nature and scope of brand management in SMEs. However, just the empirical study of Berthon, Ewing and Napoli (2008) is not sufficient to fill the identified gap in the brand management literature. In other words, the gap is still open and the present study contributes further to the filling of the identified gap. The present study has academic added value, because such major gap in the brand management literature can not be resolved by a single study based on a sample of 263 organizations in Australia. This is why the present study can be partly viewed as a kind of reproduction of their study to further reduce the identified gap in the brand management literature. Berthon, Ewing and Napoli (2008) sought to first identify whether BMPs employed by SMEs varies to that of LOs and second, whether such differences extend to high- and low-performing. Their results indicate that there are certainly difference between SMEs and LOs in the extent to which they implement key BMPs. It is evident from their results that SMEs and LOs alike are both cognizant of the need to deliver relevant and desirable brands to the customers. However, they found that the BMPs of LOs are certainly more geared toward understanding and monitoring consumer needs and measuring the
effectiveness of past actions. It is also evident from their results that the 10 BMPs dimensions are effective in discriminating between high- and low-performing small and large
organizations. More importantly for the purpose of the present study, it seems that high-performing SMEs implement key BMPs to a greater extent than low-high-performing SMEs. The authors found that brand-focused SMEs are able to achieve a distinct performance advantage over rivals by essentially getting back to the ‘branding basics’: that is, understanding
customers’ needs and brand perceptions, creating relevant and valued brands, supporting the brand consistently over time, effectively communicating the brand’s identity to internal and external stakeholders and creating a coherent brand architecture. Such activities are well noted in the literature as necessary for building and managing brand equity in the long term (e.g. Park, Jaworski & MacInnes, 1986; Aaker, 1991; Keller, 2003). This suggests that an SME’s approach to brand management indeed differs from the practices adopted by larger
organizations (LOs), which raises the question of how brands are in fact, managed within SMEs in the Netherlands. Hence, the following axiom and propositions are offered:
A1: SMEs in the Netherlands and LOs in the Netherlands will vary in the extent to which they
P1: Key brand management principles (BMPs) differentiate high versus low performing SMEs
and LOs in the Netherlands.
P2: High- and low-performing SMEs in the Netherlands will differ in the extent to which they
implement key brand management principles (BMPs).
2.4 Service branding
The service-dominant economy challenges the product-centric nature of the traditional brand concept (Berry, 2000; Klaus & Maklan, 2007). Several researchers hinted to the fact that the intrinsic characteristics of services may pose particular challenges to marketers and brand managers (e.g. Berry, 1980; De Chernatony & Dall’Olmo, 1997, 1999). Although there have been strong service brand for years, the pervasiveness and level of sophistication in branding services has accelerated in the past decade (Keller, 2003). Services are different from products because they are intangible, unique (heterogeneous), and co-produced with the customer (inseparable) (e.g. Anderson, Fornell & Rust, 1997; De Chernatony & Segal-Horn, 2001; Lusch, Vargo & O’Brien, 2007). Services tend to be intangible and thus very difficult to evaluate in terms of quality, especially before purchase and consumption (Brady, Bourdeau & Heskel, 2005; Paswan, Spears & Ganesh, 2007). In other words, services tend to be low in search quality and high on both experience and credence quality (e.g. Zeithaml, Berry & Parasuraman, 1993; Lovelock, 1996; Paswan, Spears & Ganesh, 2007). Search quality captures aspects of services that potential consumers can and would like to assess before they select a particular product or service (Paswan, Spears & Ganesh, 2007). Additionally, these authors pose that search quality encompasses consumers’ expectations of quality of service. In comparison, experience quality can only be assessed during and after consumption, whereas credence (belief or faith about) qualities are virtually impossible to evaluate even after
name (e.g. Kotler & Armstrong, 1996; Gregrory, 2003; Keller, 2003). In other words, it can be stated that brands reduce consume search costs, perceived risk, and signal the quality of the product (e.g. Herbig & Milewicz, 1993; Erdem, 1998; Janiszewski & Van Osselaer, 2000). The brand, therefore, becomes the purveyor of advantages to the consumer, in terms of both economic and symbolic value (O’Cass & Grace, 2003). A strong service brand is essentially a promise of future satisfaction (Berry, 2000). Berry (2000) points out it is a blend of what the company says the brand is, what others say, and how the company performs the service – all from the customer’s point of view. Next, the characteristics of services and their implications for marketing management (especially branding) will be discussed. After this outline the service-branding model will be explained in subparagraph 2.4.4, because the experts’ view is that the execution of branding strategies may need adjustments to comply with specific service features (De Chernatony & Dall’Olmo, 1999; O’Cass & Grace, 2003). Finally, the axioms and propositions of the present study are presented in subparagraph 2.4.5
2.4.1 Intangibility
Services cannot be felt or touched, presenting a significant challenge for marketing, because intangibility intensifies the perceived risk for customers (e.g. Levitt, 1960, 1981; Keller, 2003). Intangibility, however, is not limited to services; nor is tangibility limited to goods (Brady, Bourdeau & Heskel, 2005). Levitt (1981) points out, all goods and services have both tangible and intangible elements. Product intangibility does not mean that brand development is less appropriate or important for services than goods, only that its implication differs in certain respects (Berry, 2000; Keller, 2003). Brand development is crucial in services, given the inherent difficulty in differentiating products that lack physical differences and the intense competition within service markets, many of which have been deregulated (e.g. Zeithaml, 1981; Berry, 2000; McDonald, De Chernatony & Harris, 2001). Onkvisit and Shaw (1989) suggest that, because of intangibility, it is more crucial to create a proper image for service products than for physical goods and they recommend using brand names to reduce
consumers’ purchase risk. Because of the increased difficulty in evaluating a service, the selection of a brand name is extremely important (Turley & Moore, 1995). Service providers are challenged to incorporate physical evidence into the marketing mix to provide surrogate tangibility, such as risk-free trials, or build tangible artifacts that denote service quality (Berry & Bendapudi, 2003; Klaus & Maklan, 2007). Strong brands enable customers to better
2.4.2 Heterogeneity
Every interaction between customer-facing employees and customers creates quality impressions (e.g. Keller, 2003; Lee et al., 2006; Harris, 2007). Therefore, quality control processes are of the utmost importance to assure the delivery of consistent service across all customer-facing employees (e.g. King & Grace, 2006; Frow & Payne, 2007; Klaus & Maklan, 2007). It is essential that employee’s behavior is consistent and, thus, reinforces the service brand’s advertised benefits (King & Grace, 2006; Harris, 2007). If wisely conducted, this reinforcement breeds more success in terms of sales, awareness and loyalty (Harris, 2007). Organizations are aware that there is a fine line between standardizing their services and giving employees sufficient flexibility to address the distinctive differences among their customers and the unique circumstances of each interaction (Klaus & Maklan, 2007). The notion of empowerment, that is, the effective use of employees who embody the principles of the organization, has been proven to be a competitive advantage for successful service
organizations (e.g. Lee et al., 2006; Yagil, 2006; Klaus & Maklan, 2007).
2.4.3 Inseparability
2.4.4 Service-branding model
As discussed before, branding plays a special role in service companies (e.g. Berry, 2000; O’Cass & Grace, 2003; Grace & O’Cass, 2005). Product intangibility and the salient role of service in customer value creation focus customer attention on the company as an entity (Berry, 2000; McDonald, De Chernatony & Harris, 2001). In other words, with services, the company as a whole is usually viewed as the provider of the experience (e.g. Berry & Parasuraman, 1991; Berry, 2000; McDonald, De Chernatony & Harris, 2001). Service companies build strong brands through brand distinctiveness and message consistency, by performing their core services well, from reaching customers emotionally, and by associating their brands with trust (e.g. Berry, 2000; Moorthi, 2002; Brady, Bourdeau & Heskel, 2005). Strong-brand companies have high ‘mind share’ with target customers, which contributes to market share (Berry, 2000).
Berry (2000) introduced a Service-branding Model of service brand equity. Similar to Keller (1993), Berry (2000) advocated that brand equity is comprised of brand awareness and brand meaning. Furthermore, Berry (2000) argued that the primary source of brand awareness is the company’s presented brand, i.e. the company’s controlled communication. This
firms with the strongest brands typically use all four approaches. The following sections of this subparagraph are completely based on the study of Berry (2000).
Figure 2.2. Cultivating brand equity (source: Berry (2000))
Dare to be different
Service companies with the strongest brands reveal a conscious effort to be different. Those companies want to carve out a distinct brand personality. Top brand builders almost always are mavericks that defy convention and forge new paths to reach and please customers. The desire to create a distinct mental picture of the company for customers manifests itself in the presented brand and the customers’ service experience paths in the service-branding model. The branding strategy goal is to reinforce a demonstrably different service experience with a demonstrably different brand presentation. Strong-brand firms never market their offer as a commodity (Peters, 1997). Invention rather than imitation rules branding efforts. Companies can use several tools at their disposal to craft a separate, integrated identity and to contribute to the differentiation strategy, including facilities design, service provider appearance, core service augmentation, advertising content and style, and media selection.
It can be expected that this first approach of the Service-branding Model of Berry (2000) for service companies to build strong brands have implications on the extent to which service companies implement key BMPs of the brand report card of Keller (2000, 2003). Specifically, it can be expected that service companies implement BMP 2 (The brand is
Determine your own fame
A strong-brand service company stands for something that is important to targeted customers; the brand not only differs from competitive brands, it represents a valuable market offer. The brand conveys the company’s reason for being. It captures and communicates what the company wishes to be famous for with customers. Service companies strengthen brand equity by focusing on underserved market needs. They enhance the customers’ experience by doing something that needs doing. Strong-brand companies also perform the service effectively. They not only fill a need, they fill it well. Performing a needed service and performing it better than competitors is a powerful brand-building combination. In essence, service companies with strong brand equity provide a service that customers truly value; perform it better than competitors; and effectively tell their story through communications that create awareness, stimulate trial, and reinforce customers’ experiences. Over time, these companies become famous for their defining excellence, aided not only by their own controlled messages but also by customers’ experiences and word-of-mouth communications. The company’s name also contributes to brand awareness. Because of the powerful influence of customers’ actual service experiences on brand meaning and brand equity, a service company can overcome a mediocre name. However, a good one certainly helps.
It can be expected that this second approach of the Service-branding Model of Berry (2000) for service companies to build strong brands have implications on the extent to which service companies implement key BMPs of the brand report card of Keller (2000, 2003). Specifically, it can be expected that service companies implement BMP 3 (Customers receive
superior delivery of the benefits they value most), BMP 4 (The brand take full advantage of the full repertoire of branding and marketing activities available to build brand equity), and
BMP 8 (The brand is innovative and relevant) to a greater extent than product-centered companies.
Make an emotional connection
actual experience with the service. Marketing communications cannot establish nonexistent values. Brands that connect emotionally are authentic summations of a company with a soul. Given the prevalence of price-oriented advertising in service markets, the minimal role of price messages in the advertising of many strong-brand service companies is notable. Companies that emphasize price in their advertising forfeit the opportunity for an emotional connection with their customers. Price-dominated marketing messages ring the emotional bell of few customers. Price advertising may be about economic value, but is not about human values, it does not stir the soul.
It can be expected that this third approach of the Service-branding Model of Berry (2000) for service companies to build strong brands have implications on the extent to which service companies implement key BMPs of the brand report card of Keller (2000, 2003). Specifically, it can be expected that service companies implement BMP 7 (The brand uses
appropriate imagery to support its personality) to a greater extent than product-centered
companies.
Internalize the brand
Service performers are a powerful medium for building brand meaning and equity. Their actions with customers transform brand vision to brand reality—for better or worse. Service providers make or break a brand, for the customers’ actual experiences with the service always prevail in defining the brand for them. With their on-the-job performances, service providers turn a marketer articulated brand into a customer-experienced brand. Negative customer experiences are difficult for a company to overcome in its branding efforts, no matter how effective its marketing communications. Superior customer experiences are difficult for competitors to imitate, no matter how effective their marketing communications. Services are just as intangible for employees as they are for customers. Branding is not only an opportunity to establish a mental picture of the service and its reason for being for customers; it also is an opportunity to do this for service providers. The more providers internalize the concept and values of the service, the more consistently and effectively they are likely to perform it. It is a common misconception about brands that they are strictly for external purposes when, in fact, the role of a brand is to communicate inside the company also. Berry and Parasuraman (1991) describe the concept of internalizing the brand:
creative communication of the brand to employees. It involves training employees in brand-strengthening behaviors. It involves rewarding and celebrating employees whose actions support the brand. Most of all, internalizing the brand involves involving employees in the care and nurturing of the brand. Employees will not feel part of nor act out the brand unless they understand it and believe in it. Marketers need to verbalize and visualize the brand for employees, so that employees will verbalize and visualize the brand for customers. Brand internalization must be an ongoing process, just as brand building is an ongoing process with customers’. Just as advertising is a principal brand-building tool externally, so is it a principal tool internally.
It can be expected that this fourth and final approach of the Service-branding Model of Berry (2000) for service companies to build strong brands have implications on the extent to which service companies implement key BMPs of the brand report card of Keller (2000, 2003). Specifically, it can be expected that service companies implement BMP 4 (The brand
take full advantage of the full repertoire of branding and marketing activities available to build brand equity), and BMP 5 (Marketing and communications efforts are seamlessly integrated) to a greater extent than product-centered companies.
2.4.5 Following axioms, propositions, and hypotheses
that an SME’s approach to brand management differs from practices adopted by LOs also hold for companies within the service sector. Hence, the following axioms and propositions are offered:
A2: SMEs in the Dutch service sector and SMEs in other Dutch sectors will vary in the extent
to which they implement key brand management principles (BMPs).
A3: SMEs in the Dutch service sector and LOs in the Dutch service sector will vary in the
extent to which they implement key brand management principles (BMPs).
P3: Key brand management principles (BMPs) differentiate high versus low performing SMEs
and LOs in the Dutch service sector.
P4: High- and low-performing SMEs in the Dutch service sector will differ in the extent to
which they implement key brand management principles (BMPs).
Branding plays a special role in service companies (e.g. Berry, 2000; O’Cass & Grace, 2003; Grace & O’Cass, 2005). The execution of branding strategies may need adjustments to comply with specific service features (De Chernatony & Dall’Olmo, 1999; O’Cass & Grace, 2003). For this purpose Berry (2000) introduced the Service-branding Model of service brand equity. Despite this fact, it is still valid to use the brand report card of Keller (2000, 2003) to systematic measure the brand performance of a service brand. The brand report card can help to identify areas that need improvement, recognize areas in which the brand is strong, and learn more about how a particular brand is configured (e.g. Keller, 2000, 2003; Mandour, Bekkers & Waalewijn, 2005). Furthermore, Keller (2003) emphasizes that the use of the brand report card is not restricted to a particular sector. Berry (2000) presents four ways, (1) dare to be different, (2) determine your own fame, (3) make an emotional connection, and (4) internalize the brand, in which service companies build strong brands. As mentioned before in subparagraph 2.4.4, it can be expected that these four ways has implications for the extent to which service companies implement key brand management principles (BMPs). Hence, the following axiom is offered:
A4: Service companies and companies in other sectors in the Netherlands will vary in the
Furthermore, the following hypotheses are offered:
H1: Service companies implement key brand management principle (BMPs) 2, the brand is
properly positioned, to a greater extent than companies within other sectors.
H2: Service companies implement key brand management principle (BMPs) 3, customers
receive superior delivery of the benefits they value most, to a greater extent than companies within other sectors.
H3: Service companies implement key brand management principle (BMPs) 4, the brand take
advantage of the full repertoire of branding and marketing activities available to build brand equity, to a greater extent than companies within other sectors.
H4: Service companies implement key brand management principle (BMPs) 5, marketing and
communications efforts are seamlessly integrated (the brand communicates with one voice), to a greater extent than companies within other sectors.
H5: Service companies implement key brand management principle (BMPs) 7, the brand uses
appropriate imagery to support its personality, to a greater extent than companies within other sectors.
H6: Service companies implement key brand management principle (BMPs) 8, the brand is
innovative and relevant, to a greater extent than companies within other sectors.
2.5 Present study
Chapter 3 Research design
In this chapter the measuring instrument is discussed in paragraph 3.1. The procedure of the present study will be explained in paragraph 3.2. Next in paragraph 3.3 the plan of data analyses is presented. In paragraph 3.4 the respondents of the present study will be described. Finally, the progress of the present study will be discussed in paragraph 3.5.
3.1 Measuring instrument
The basis of the questionnaire is formed by the brand report card (BRC) of Keller (2003). The BRC introduced 27 validated items, purported to measure organizational BMPs and
philosophies. These items do not show any overlapping, ambiguous or irrelevant items, this resulted in the retention of all 27 items in the present study. Furthermore, the value of the guidelines proposed by Keller for the creation of a strong brand SME was confirmed by the study of Krake (2005). To date, the BRC of Keller (2000, 2003) is widely applied by several authors (e.g. Ewing & Napoli, 2005; Wong & Merrilees, 2007; Berthon, Ewing & Napoli, 2008). Next to this, many authors use the guidelines of Keller as a reference in their study (e.g. Becker-Olsen & Hill, 2006; Thompson, Rindfleisch & Arsel, 2006; Laidler-Kylander, Quelch & Simonin, 2007). Mandour, Bekkers and Waalewijn (2005) introduce two marginal notes: (1) it is not possible to maximize all the BMPs at the same time and (2) the perceptions of the customers are sometimes difficult to establish. Despite this, it can be stated that the contribution of Keller (2000, 2003) is still up-to-date, valid and fits the purpose of the present study. This is why the present study uses the brand report card of Keller (2003) as the basis of the questionnaire. After the construction of the questionnaire of the present study, the
questionnaire was reviewed by three senior managers of SMEs, to evaluate each statement for relevance and clarity. All 27 items were retained for analyses, although minor adjustments to the wording of some statements were required. Some definitions of constructs were included in the questionnaire to make it easier to understand for the respondents. Each item was then placed on a seven-point scale, with respondents asked to rate the extent to which their organization engaged in the activity described. A response of 1 reflected ‘to a very little extent’, and a 7 ‘to a very great extent’. Following the study of Berthon, Ewing and Napoli (2008) the questionnaire of the present study also included subjective measures of
Lumpkin & Covin, 1997). The use of subjective measures can also be an effective way by which to overcome difficulties associated with obtaining, what could be described as, competitively sensitive information (Caruana, Ramaseshan & Ewing, 1998). Furthermore, measuring an organization’s performance using objective financial data can be difficult as the information may either be unavailable, unreliable or difficult to validate with external sources (Sapienza, Smith & Gannon, 1988). The organization performance was the composite of three self-report measures of performance: return on investment, market share and ability to serve customers better, relative to rivals (e.g. Conant, Mokwa & Varadarajan, 1990; Delaney & Huselid, 1996; Youndt et al., 1996). The index for performance was the composite of the three self-report measures of performance, a total score of 9 and higher represent high-performing organizations and a total score of 8 or lower represent low-high-performing
organizations. Furthermore, there were some general questions included in the questionnaire to describe the sample of the present study. This will be done in paragraph 3.4. The complete questionnaire can be found in appendix 1.
3.2 Procedure
Consistent with prior literature, the target group of the present quantitative study can be defined as Dutch organizations that marketed their products and/or services directly to final customers, also known as the business-to-consumer market (B2C). The questionnaire of the present study had to be completed by the brand manager of the organizations. In case of organizations with no explicit brand manager, the questionnaire had to be completed by the marketing manager or the business-owner, in case of a small organization with no marketing function. Malhotra (2004) emphasizes that a quantitative study requires a (sub)sample size of at least 20 respondents for significant testing. The minimal required total sample size of the present study was 100 organizations, this is not the bare minimum for significant testing in a quantitative study. A reasonable equally distribution over the several categories of
respondents of the present study is also required. The total sample includes ideally at least 50 service companies and at least 50 product-centered companies. Futhermore, both sub samples include ideally at least 25 SMEs and at least 25 LOs. Berthon, Ewing and Napoli (2008) included mainly the following industry sectors: (1) FMCG, (2) Manufacturer-Shopping/Specialty Goods, (3) Retailers, and (4) Banking/Insurance Services, these industry sectors are among others also represented in the present study. Industries were selected based on the branches specified by the Dutch Kamer van Koophandel and specific branch
selected through a stratified sampling technique. This technique is used because of following two reasons: (1) to ensure that particular groups within a population are adequately
represented in the sample, and (2) to improve efficiency by gaining greater control on the composition of the sample. The targeted respondent was approached by telephone for their participation in the present study. In this conversation over the telephone there was provided information about the purpose and the procedure of the study and the time needed to complete the questionnaire, approximately 10 minutes. Furthermore, a confidential and anonymous process of their response was guaranteed. This was possible because every respondent
received a unique respondent number. After the respondent agreed to participate in the present study, the questionnaire was send to the respondent by mail or by e-mail according to the preferences of the respondent. The questionnaires were send to the respondents in the months April and May of 2008. In the introduction of the questionnaire was the information about the purpose and the procedure of the study and the confidential and anonymous process of the response once again provided. In addition, the respondents were asked in the introduction of the questionnaire to complete the questionnaire within two weeks. If a respondent did not complete the questionnaire within two weeks, he or she received a reminder to complete the questionnaire within the next week.
3.3 Plan of data analysis
To analyze the empirical data and to describe the sample of the present study there will be used descriptive statistics. Consistent with the study of Berthon, Ewing and Napoli (2008), the data analyses proceeded in a number of stages. In the first stage of analysis, there will be performed a reliability analysis of BMPs by item and dimension. In other words, the reliability of items comprising the 10 BMPs of Keller (2000, 2003) will be assessed. The second stage of the analysis can be divided in four separate parts. In the first part of the second stage of analysis, BMPs in SMEs and LOs were compared by performing an
