Consumer Based Brand Equity Structural Equation Modeling

1. Interrelationship between BrandInterrelationship between Brand
Equity Dimensions:Equity Dimensions:
A SEM Approach to Leather Shoe BrandsA SEM Approach to Leather Shoe Brands
Presented by
Prof. Dr. Kundan Dutta Koirala
Tribhuvan University
Sajeeb Kumar Shrestha
Research Fellow, Ph.D.
Teaching Assistant, Shanker Dev Campus,
Tribhuvan University
drsajeeb@gmail.com
3rd
International Conference
Transforming Management System for Innovation, Development and Governance
March 27-29, 2015
Hotel Yak& Yeti, Kathmandu
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2. Background of the StudyBackground of the Study
Brand is a unique name or symbol aimed to
identify the goods or services from other
sellers or competitors (Aaker, 1991).
A brand is simply a promise that an
organization communicate to the markets.
Brand name assures consumers not to ask
more about product benefits while
purchasing the products (Borden, 1942).
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3. ……
Before 1980s different approached were
used to mention the brand (Kapferer, 1997).
Brand has been treated as a non routine
fashion and it's just a part of the product
(Urde, 1999).
Today, branding has become a major
concern area of product category (Kotler,
2002).
Brand tells the potential qualities of the
product (Kapferer, 1997). 3

4. Research Questions andResearch Questions and
ObjectivesObjectives
The primary objective of the study is to
examine the interrelationship of Aaker’s
customer based brand equity model (Aaker,
1991) in Nepalese leather shoe brands.
Questions:
 What is the valid model of brand equity in
leather shoe brands in Nepal?
Objectives
To examine the valid model of brand equity
in leather shoe brands in Nepal? 4

5. ReviewReview
Brand Equity:
The value consumers associate with a
brand, as reflected in the dimensions of
brand awareness, brand associations,
perceived quality, brand loyalty, and other
proprietary brand assets. (Aaker, 1991)
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6. ……
Brand Awareness:
The ability of a buyer to recognize or recall
that a brand is a member of certain product
category. (Aaker, 1991).
Perceived Quality:
Perception of the overall quality or
superiority of a brand relative to alternative
products (Low & Lamb Jr., 2000).
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7. ……
Brand Association:
Brand associations consist of all brand-
related thoughts, feelings, perceptions,
images, experiences, beliefs, attitudes and is
anything linked in memory to a brand.
(Kotler & Keller, 2006)
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8. ……
Brand Loyalty:
Brand loyalty as the attachment of a
customer to a brand (Aaker, 1991).
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9. Figure 1: Research Framework
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PQQ
BAWW
BLL
BASS
OBEE
H3
= γ3
H2
= γ2
H1
= γ1
H4
= α1
H5
= β1
H6
= β2
H7
= β3
H8
= β4
H10
= β6
H9
= β5
Research Framework

10. Hypotheses
 H1 (γ1): Brand awareness has significant positive effect on perceived
quality.
 H2 (γ2): Brand awareness has significant positive effect on brand
association.
 H3 (γ3): Brand awareness has significant positive effect on brand loyalty.
 H4 (α1): Brand awareness has significant positive effect on brand equity.
 H5 (β1): Perceived quality has significant positive effect on brand
association.
 H6 (β2): Perceived quality has significant positive effect on brand loyalty.
 H7 (β3): Perceived quality has significant positive effect on brand equity.
 H8 (β4): Brand association has significant positive effect on brand loyalty.
 H9 (β5): Brand Association has significant positive effect on brand
equity.
 H10 (β6): Brand loyalty has significant positive effect on brand equity.
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11. MethodologyMethodology
Research design: Descriptive and Causal.
Sample Case: Actual customers who
purchased leather shoe
Sample frame: Nepali Shoes House; Nepali
Leather Shoes Exhibition.
Sample Methods: Convenience Sampling
Data: Primary data.
Data collection: Structured questionnaire.
389 responses were valid.
Tools of Analysis: SEM
Software: SPSS 20, AMOS 20. 11

12. AnalysisAnalysis
Exploratory Factor Analysis (EFA)
 Bartlett's test of Sphericity (Chi-square 7457.16 (df25, sig.
0.000)
 KMO = 0.912
 Sample were adequate and data were fit for factor analysis.
 Five factors were extracted that cumulatively accounted
69.98 percent of the total variance.
 All the statements with factor loadings greater than 0.5
were clubbed in the corresponding factor.
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13. Rotated Component Matrixa
Component
1 2 3 4 5
BAS7 .770
BAS3 .767
BAS2 .742
BAS1 .706
BAS8 .650
BAS4 .626
BAS6 .620
BAW2 .905
BAW1 .886
BAW3 .874
BAW4 .852
BAW5r .753
PQ4 .865
PQ1 .862
PQ3 .858
PQ2 .856
PQ5r .603
BL1 .761
BL2 .747
BL3 .718
BL5 .710
BL6 .702
OBE2 .795
OBE1 .778
OBE4 .718
OBE3 .595
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 6 iterations.
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Table1: Rotated Component Matrix

14. Confirmatory Factor Analysis (CFA)
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Model
Scale
Items
Model Fit Fit Indices
α AVE α>AVE CMIN/DF CFI GFI AGFI RMSEA RMR
>0.7 >0.50 α>AVE 3-5 >.90 >.90 >.90 <.1 <.5
Final
Measurement
Model
2.13 0.96 0.91 0.88 0.54 0.07
Remarks BA1, BA2, BA3, BA5, and BA6 were deleted.
Table 2: Model Fit Indices

15. Validity and Reliability of the Model
 Discriminant Validity
 AVE should be greater than 0.50 (Fornell & Larcker, 1981).
 AVE should be greater than MSV
 AVE should be greater than ASV.
 Convergent Validity:
 Construct Reliability (CR) should be greater than 0.7
 CR should be greater than AVE.
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16. Table3: Validity and Reliability of ConstructsTable3: Validity and Reliability of Constructs
CR AVE MSV ASV BLL BASS BAWW PQQ OBEE
BLL 0.900 0.643 0.476 0.321 0.802
BASS 0.775 0.545 0.476 0.223 0.690 0.738
BAWW 0.929 0.725 0.127 0.102 0.356 0.356 0.852
PQQ 0.912 0.681 0.244 0.174 0.494 0.408 0.302 0.825
OBEE 0.818 0.543 0.436 0.204 0.660 0.351 0.253 0.439 0.737
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17. Figure 2: Final Overall Measurement Model 17

18. Figure 3: Structural Equation Modeling (SEM) 18
Structural Equation Modeling (SEM)

19. 19
S.N.
Dependent
Variable
Independent Variable
Squared Multiple
Correlations (R2
)
1 Perceived Quality Brand Awareness 0.091
2
Brand
Associations/Image
Brand Awareness, Perceived Quality 0.226
3 Brand Loyalty
Brand Awareness, Perceived Quality,
Brand Associations/Image
0.536
4
Overall Brand
Equity
Brand Awareness, Perceived Quality,
Brand Associations/Image, Brand
Loyalty
0.478
Table 4: Variance Explained by Structural Model

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Hypotheses Testing
Hypotheses From TO
Standardized
Coefficients
S.E. t-value Results
H1 BAWW PQQ γ1= 0.302 0.032 5.781 Significant
H2 BAWW BASS γ2 = 0.256 0.043 4.858 Significant
H3 BAWW BLL γ3 = 0.083 0.036 1.797 Not Significant
H4 BAWW OBEE α1=0.025 0.039 0.526 Not Significant
H5 PQQ BASS β1 = 0.33 0.071 6.125 Significant
H6 PQQ BLL β2 = 0.24 0.063 4.897 Significant
H7 PQQ OBEE β3 = 0.165 0.07 3.104 Significant
H8 BASS BLL β4 = 0.562 0.059 9.244 Significant
H9 BASS OBEE β5 = -0.224 0.072 -3.086 Significant
H10 BLL OBEE β6 = 0.724 0.082 9.06 Significant
Table 5: Interrelationship of Brand Equity Dimensions

21. 21
Relationship
Direct
without
mediator
Direct
with
mediator
Significance
Indirect
Relationship
BAWW-PQQ-OBEE 0.251 (S) 0.312(S) 0.001 (S) Partial mediation
BAWW-BASS-OBEE 0.251 (S) 0.045 (NS) 0.011 (S) Partial mediation
BAWW-BLL-OBEE 0.251 (S) 0.020 (NS) 0.06 (NS) No mediation
Table 6: Mediation Tests

22. Limitations of the StudyLimitations of the Study
Data are primary in Nature.
Study is conducted in capital city
(Kathmandu).
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23. FindingsFindings
Brand equity dimensions (BAWW, PQQ,
BAWW and BLL) are interrelated with each
other.
Brand Awareness does not affect directly
Brand Loyalty and Brand Equity.
Brand loyalty is the major factor for
increasing brand equity.
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24. ……
From bootstrapping, Brand association
(BASS) significantly mediates brand
awareness (BAWW) to brand equity (BEE).
So, it is also called partial mediation.
But, brand loyalty cannot mediate brand
awareness to build brand equity. It is found
no mediation.
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25. ConclusionConclusion
The findings of the study empirically
confirms that proposed model is valid in the
context of Nepalese shoe brands.
The study is similar to Dua et al. (2013),
Shrestha (2011) and Tong & Hawley (2009)
that perceived quality, brand association and
brand loyalty have played significant role in
creating brand equity.
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26. ……
The SEM model depicted that brand
awareness, perceived quality; brand
associations and brand loyalty were the
antecedent factors for brand equity in the
leather shoe brands.
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27. ……
Leather shoes markets are at the growing
stage of marketing and exercising mostly
selling as well as marketing philosophy in
Nepal.
Through nested model, shoes companies
can communicate their potential customers
and make a big sale.
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