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The influence of online communication, word of mouth and virtual community on online brand equity Fei-Fei Cheng1, Chin-Shan Wu2, Hsiao Yen 3 Current study aims to investigate the possible factors that influence online brand equity, which was measured by brand awareness, perceived quality, brand association and brand loyalty. The three predictors included in the research framework are online communication tools (which include online advertising and e-mail marketing), word of mouth and virtual community. An online questionnaire survey was conducted and the results suggested that online communication tools can be used to establish brand awareness and brand image; while virtual community is a useful tool to create brand loyalty. Finally, word of mouth had significant effect on perceived quality. 1. Introduction More and more companies are establishing websites to offer a new channel for business transactions. To be successful dot.com company must develop feasible strategies that deliver both consumer and economic value (Porter, 2001). Aaker (1991) proposes that brand equity creates value for the firm as well as for the customer. Although it might be very difficult to develop strong brand equity for online companies because the competition is very intensive and the consumers’ switching cost is quite low, brand equity is an important source of competitive advantage for online companies. Unfortunately, there lacks studies that investigate the determinates of online brand equity. Thus, the objective of current study is to understand what factors will contribute to the 1 Dr. Fei-Fei Cheng, Institute of Technology Management, National Chung Hsing University, Taiwan. E-mail: [email protected] 2 Dr. Chin-Shan Wu, Department of Information Management, Tunghai University, Taiwan. E-mail: [email protected] 3 Miss Hsiao Yen, Institute of Technology Management, National Chung Hsing University, Taiwan. E-mail: [email protected] 1 online brand equity. The factors in this study mainly focus on the marketing elements that include online marketing communication tools, word of mouth and virtual community. 2. Methodology The measurement of each construct was derived from existing literature in which the four brand equity constructs all come from Washburn and Plank (2002). There are three items for all the four constructs except brand awareness which consists of two items. Measurement of the online communication tools was adapted from Jensen (2008) which consist of six questionnaire items. Finally, items for word of mouth were adapted from Srinivasan, Anderson, and Ponnavolu (2002) while virtual community items were derived from Sumeet, Kim, and Zheng (2006). All the items were measured based on a five-point Likert scale with 1=strongly disagree and 5=strongly agree. An online questionnaire survey was conducted to collect the necessary data. Consumers who have ever purchased products from an well-known online apparel store in Taiwan, Lativ, was invited to participate the survey. 3. Data analysis 3.1 Hypotheses testing Regression analysis was conducted to test the relationships between variables. Four independent regression with four dependent variables were conducted. All the regression models were significant at p<0.001 level. The results indicated that online communication tools (including online advertising and e-mail marketing) significantly influence brand awareness and brand image. Thus, current study provide evidence that advertisement can be used to create the brand equity in terms of increasing brand awareness and brand image. In addition, word of mouth had significant influence on perceived quality, but had no effect on brand loyalty. This suggested that positive word of mouth can enhance the online consumers’ perceived quality. However, if the marketer wants to increase the consumers’ brand equity, establishing virtual community to form a sense of family would be a more useful way than relying on word of mouth. 2 4. Conclusion Most of the previous study that investigate the predictors of brand equity mainly focus on the traditional brand. Studies on online brand are largely ignored. Current study adopted the brand equity model to explore the possible factors to create the online brand equity. The results suggested that online communication tools, word of mouth and virtual community are all had significant influence on brand equity in which online communication tools can be used to enhance the brand awareness and brand association. Word of mouth can result in perceived quality, while virtual community will form perceived quality and brand loyalty. Results from current study can provide practical implication for the online brand marketers as different tools (e.g., advertisement, word of mouth, virtual community) might play different role in creating brand equality. Thus, it is suggested that the online companies should understand which part of the brand equity they need to enhance in order to design appropriate ways to communicate with the online consumers and establish brand equity. Some limitations are associated with this study that provides directions for future research. For example, the way to measure brand equity is perceptive only from customers. If other type of data source such as financial performance, the brand equity can be measured in a more objective way. Second, this study only focus on one well-known online apparel brand and thus limited the externalization of the research finding. Future studies are suggested to compare the influence on online brand equity across different industries in order to provide more understanding regarding the constituents of online brand equity. Acknowledgment Funding of this research work is supported by the National Science Council (grant number, NSC 99-2410-H-029 -041 -MY2), Taiwan. References Aaker, D. A. (1991). Managing brand equity: Capitalizing on the value of a brand name. NY: The Free Press, Macmillan. Jensen, M. B. (2008). Online marketing communication potential: Priorities in danish firms and advertising agencies. European Journal of marketing, 3 42(3/4), 502-525. Porter, M. E. (2001). Strategy and the internet. HARVARD BUSINESS REVIEW. Srinivasan, S. S., Anderson, R., & Ponnavolu, K. (2002). Customer loyalty in e-commerce: An exploration of its antecedents and consequences. Journal of Retailing, 78, 41-50. Sumeet, G., Kim, H.-W., & Zheng, R. J. (2006). Converting virtual community members into online purchase customers. The Tenth Pacific Asia Conference on Information Systems. Washburn, J. H., & Plank, R. E. (2002). Measuring brand equity: An evaluation of a consumer-based brand equity scale. Journal of Marketing Theory and Practice, 10(winter 2002 ), 46. 4