Retailers’ perceptions of product brand equity: an empirical study of Vietnamese independent grocers

Abstract

In the literature on product branding, significant attention has been paid to brand equity in the consumer context, but relatively little attention has been paid to the application of the concept of brand equity to the business-to-business context. Even less research has been conducted on the role of brand equity in the retailing context. Retailers are assumed to be irrelevant to the source of brand value for manufacturers, with the result that manufacturers do not target retailers to help them build strong brands. Therefore, there is potential for some channel conflict to occur between manufacturers and retailers. On the one hand, retailers may tend to focus on building their own, private brands to differentiate themselves from other retail competitors and to increase their power in relation to manufacturer brands. On the other hand, retailers also need to create a good image in the consumer marketplace by selling famous, manufacturer-branded products. In other words, retailers often have to sell famous brands even if they would prefer to sell other brands, or their own. Manufacturers therefore tend to focus on building strong brand associations in consumers’ minds, in order to control retailers’ power. There is an argument that traditional ways of thinking about brands, i.e. only from the consumer perspective, has produced ‘both an incomplete analysis of branding from an academic perspective and incomplete management of the brand from a company perspective’ (Webster 2000). The relationship between manufacturers and retailers should be viewed as a partnership instead of competition for consumer loyalty (Narus & Anderson 1986). Powerful consumer brands not only provide value to manufacturers and consumers, but they also offer many obvious benefits to retailers. These benefits include an established consumer demand; favourable consumer attitudes towards the branded product found in their store; a commitment from manufacturers to promote their products; and the credibility and image of the brand itself as an enhancement of the retailer’s own credibility and image(Webster 2000). Brand equity, therefore, needs to be investigated from the retailers’ perspective, in order to provide a more complete understanding of the role of branding in marketing strategies. This research attempts to bridge this gap by exploring the customer-based brand equity concept from the retailers’ perspective. It aims to explore how consumer-based brand equity theory translates to the retailer context, incorporating the key constructs of brand association, brand trust, brand loyalty, manufacturer support and the performance of the brand. The study was conducted in the context of the Vietnamese independent retail grocery sector. This context was chosen on the basis that there has been limited research conducted on branding in the Vietnamese context and due to the prominence of the independent grocery sector in the retail industry of Viet Nam. A survey questionnaire was developed based on the review of the relevant branding and retail literature and was administered to a sample of 400 independent grocery retailers in Ho Chi Minh City. This sample was drawn from a commercial mailing list of independent retailers. Selected retailers were contacted by phone and invited to participate in the research by completing the questionnaire during a face-to-face interview at their premises. They were asked to respond to the survey in relation to a major brand of soft drink sold within their product range. The soft drink product category was selected for this study due to it being one of the most common types of products sold by the independent retail sector in Viet Nam, which would ensure that all participants could easily share their opinions of the value of brands. Following a pilot study testing the survey instrument, the main data collection phase resulted in 355 completed and useable surveys being available for analysis. Structural equation modeling was used to explore the relationships between the branding constructs of interest. The findings show that the theoretical model has fit with the data. Nine out of twelve hypotheses are supported to answers four research question. The finding indicates that brand equity plays an important role in the retailing context, and it is comprised of three dimensions - brand association, brand trust and brand loyalty. Brand association is reflected in the positive image of a brand in the retailer’s perception, related to their needs and wants. This leads to a positive feeling towards that brand, which is the trust a retailer holds in a manufacturer’s brand. As the result of a strong brand, retailers commit to a long-term business relationship with the brand’s manufacturer. Two of these three dimensions of retailer-based brand equity, (brand association and brand loyalty) are positively and significantly related to the brand’s performance at the retail outlet. Manufacturer support, including advertising, sales promotion and trade promotions has been confirmed by this study to be an antecedent of retailer-based brand equity. Moreover, this study indicated that there is a difference between the retailer-based brand equity model for local brands compared to international brands, in that brand association is the most important factor in retailer-based brand equity in the international brands model while brand loyalty is the most important factor in the local brands model