Presentation given at the 3rd International Consumer Brand Relationships Conference, www.consumer-brand-relationships.org Copyright by Noor Hasmini Abd Ghani, Universiti Utara Malaysia, Malaysia Osman Mohamad, Multimedia University, Malaysia

1. 3rd International Consumer Brand Relationship Colloquium
Sept 26-28, 2013
Rollins College, Winter Park (Orlando), Florida, USA
MARKET ORIENTATION, RELATIONSHIP
MARKETING AND BRAND EQUITY: THE STUDY OF
AUTHORIZED INDEPENDENT AUTOMOBILE
DEALERS IN MALAYSIANoor Hasmini Hj Abd Ghani
School Of Business Management
College Of Business Universiti Utara Malaysia
[hasmini@uum.edu.my]
Osman Mohamed
Graduate School of Management
Multimedia University, Cyberjaya Campus
[osman6298@gmail.com]

2. INTRODUCTION
Brand equity is valuable firm’s asset as, achievement of brand equity will provide benefits such as
competitive differentiation, premium prices, higher in sales volumes, economies of scales and greater
security of demand through strong brands (Aaker, 1996a; Blackston, 2000; Hankinson, 2004; Keller, 1993). Hence, to be a
competitive brand is very important.
Looking into Malaysia industries scenario, achieving high brand equity for Malaysian brand to maintain it
competitiveness either locally or internationally is the main issue. Even, for an important industry such as
automobile industry facing this critical scenario is not exempted as well (Dewan Ekonomi, 2005b; Rafidah, 1997).
Therefore, concerning on the sources of brand equity building among Malaysian brands is vital. In relation
to this, the importance of discovering the sources of brand equity should not only be at firm’s level, but
across every customer’s interface, including firm’s marketing channel such as the automobile sales
networks.
1

3. INTRODUCTION
In Malaysia, the automobile industry is among of importance sector that contribute to the Malaysian
economy. Behind this great contribution, the role of automobile sales network such as authorized
independent sales dealers is essential.
Roles of Automobile Authorized Independent Sales Dealer:
● to assist marketing research activities organized by the firms;
● reporting the firm’s market performance;
● analyzed the firm’s competitor brand information;
● promoting the firm’s brand;
● informing any customer complaints or recommendations on behalf of firm’s customer; and
● any other task-related for customer’s motivation, comfortable and satisfaction
Consistent with Baldauf et al (2003), these characteristics possessed by dealers have made the
assessment of brands from their perspective more meaningful. Crucially, all of the customer’s perceptions
towards the firm’s brand carried by them are in their “hands”.
2

4. PROBLEM STATEMENT
Reason for two group of sales networks:
Sales branches: generate profit; strategy improvement,
innovation, and differentiation.
Authorized independent sales dealers: to create and expand
the network businesses’ participation; to ‘enjoy’ the dealer’s knowledge
and skills in selling the firm’s brand.......PhD C1, C2 & C3WRITING-
UPPhD SubmissionSubmissionSubmission-Finding defendAdditional
PhD write-upProfUSM-IPSPhd Noor Hasmini Chpt 1Figure 1.1.doc
3

5. PROBLEM STATEMENT
The issue is lack of trust and satisfaction between the authorized independent sales dealers and the firm.
Some of the authorized independent dealers feels that there is different treatment exist by the firm
between them and the sales branches.
Consequently: The ‘disorderly marketing’, unethical behaviour is exist. For example, the ‘discount war’
executed among the dealers affected the selling activities of the sales branches. Discount war will
damage the brand equity of the firm.
Due to trust and satisfaction reflected the relationship marketing element, hence:
RESEARCH
OBJECTIVE
To investigate the role of relationship marketing as mediator in influencing the
relationship between market orientation and brand equity looking at retailer’s
context, represent by the automobile authorized independent dealers.
4

6. RESEARCH HYPOTHESES
H1: Trust mediates the relationship of market orientation and overall
brand equity
H2 : Commitment mediates the relationship of market orientation and
overall brand equity
H3: Satisfaction mediates the relationship of market orientation and
overall brand equity
5

7. LITERATURE REVIEW
Benefits of brand equity : competitive differentiation; premium prices; higher in sales volumes;
economies of scales and greater security of demand through strong brands.
The greatest about brand equity is where it can be accessed from customer mind set including from
business customer such as the dealers.
The dealer’s perception toward firm’s brand is actually represented the voice of customers which
important for enhancing the firm’s brand.
[Baldauf, Cravens, and Binder, 2003]
Therefore, high dealers’ brand equity toward the firm’s brand were also able to attract their customers,
providing a guarantee of sales, easily influencing the sales of a product, and allowing it to be sold at
higher prices. But, low brand equity will cause a problem for dealers as it creates difficulties for them in
selling the firm’s product. This will affect their roles in selling activities. Low brand equity indicates that
the brand is not strong enough as it has still not achieved competitiveness. This is why the dealers’
brand equity are the crucial intangible aspect for firm to focus on.
[Cobb-Walgren et al 1995; Farquhar, 1989; Mehta et al 1996; Wood, 2000].
6

8. LITERATURE REVIEW
Therefore, the firms are supposed to work with rather than against their dealers in
enhancing or maintaining brand equity. Means, concentration on relationship marketing
becomes crucial.
Fail in managing the relationship marketing will be hard for dealers to inspire a strong sense
of trust and partnership with customers. Negative relationship between firm and dealers will
negatively impact the relationship between dealers and their customers. Without any
satisfaction and trust, loyalty will not be stimulated (Anderson & Narus, 1990; Saint-Onge, 1998; Sanzo et al 2003;
Webster Jr, 2000).
Hence, exploring the strategy that’s able to stimulate the establishment of relationship
marketing is needed.
7

9. LITERATURE REVIEW
Among of interesting strategy is Market Orientation.
Market orientation that focused on knowledge-related behaviour has been recognized as a
pillar of superior company performance .
[Boulding and Kirmani,1993; Reid et al., 2005]
Unfortunately, in response to retailers such as the dealer’s context:
● the exploration of market orientation towards their area is still poor.
● investigating of how far market orientation able to become important sources of brand
equity is still questionable.
● the research on the strategies such as relationship marketing that mediate the
implementation of market orientation is still limited
● also, lack of empirical studies on relationship marketing and market orientation
as important sources of brand equity in Eastern countries, including the
Malaysian channel context, reflected the limitations in understanding
relationship marketing and market orientation as an important strategy
[Kohli and Joworski, 1990; Ind and Bjerke, 2007; Bigne & Blesa, 2003; Cravens & Guilding, 2000; Day & Wensley, 1988; Ruekert, 1992; Bhuian,
1997]
To minimize the shortcomings, this study presents a framework of relationship
marketing in mediates the relationship between market orientation and brand equity
based on dealers’ perspectives.
8

10. METHODOLOGY
Sampling Procedure:
● The study focused on dealers’ relationship marketing and market orientation in relation to
branding perspective.
● The respondent involved is referring to the authorized independent sales dealers of four major
automobile brands in Malaysia: Proton, Perodua, Honda, and Toyota
●The authorized independent sales dealers is defined as, “individual independent dealer and
superdealer (if have) that are contractually appointed by a firm as important intermediaries that
deal with all activities involved in carry and selling exclusively the firm’s product/brand to final
customer; indirectly represent firm’s business “partnership” that perform the important function on
behalf of a firm in fulfilling customer needs; and, a firm’s business “customer” as well, who bought
in a certain or large volume of the product (stock) and tied with the payment arrangement for any
stock allocation”.
● A survey method is used in the study.
● A questionnaire is developed and distributed to 132 automobile authorized independent
sales dealers in Peninsular Malaysia.
● All respondents are randomly selected by following the procedure proposed by [Malhotra,
1993].
● All respondents were given two-weeks to complete the questionnaire. From 132 responses,
only 129 valid responses were received giving a response rate of 97.7 percent.
9

11. METHODOLOGY
Research Construct
Brand Equity: “a set of assets and liabilities linked to the brand, which add value to or subtract value from a product in its
relationship with customers” Villarejo-Ramos and Sanchez-Franco (2005).
► Brand Loyalty; Perceived Quality; Brand Awareness; and Brand Image.
► In this study brand loyalty and brand awareness are excluded but brand image and perceived quality are
remained.
► Reasons:
* It is a fact that all of the car dealers are already loyal and receive huge awareness about the car brands
they carry
* The inclusion of brand image is also able to covers the brand awareness
* Brand image is developed via brand awareness and brand associations.
* Brand awareness with strong brand associations makes up the brand image
► Brand image - “a set of [brand] associations, usually in some meaningful way. These brand associations
that create its image are related to a series of tangible and intangible elements associated with the brand”
- Positive brand image lead to brand choice and produce greater customer (and retailer) loyalty.
► Perceived quality- “a subjective judgement made by the customer regarding the excellence or superiority
of a product”
- Perceived quality is a brand value dimension that ultimately induces the customer (like a dealer) to
select a brand to purchase.
- Indeed, product quality is a firm’s essential resource for achieving competitive advantage
(Aaker, 1989; Baldauf et al., 2003; Keller, 1993; Villarejo-Ramos and Sanchez-Franco, 2005)
10

12. Additional component of brand equity assets:
► Brand leadership- “part of the core identity that reflects the leading brand in its category, growing in
popularity
and respected for innovation in its product class” (Aaker, 1996b).
- supplementary to the perceived quality construct
- perceived quality still not tapping the dynamics of the market
(Aaker, 1992;1996a).
► Brand performance - a financial indicator in the form of subjective profitability and market performance
- Important benchmark for retailers.
- For credible measurement of brand equity, it is good to incorporate both attitudinal and behavioral
components of brand equity
[Aaker, 1996a, 1996b; Baldauf et al., 2003].
Items Measurement for Brand Equity: Involved of 20 items which, specific to:
● six(6) items for perceived quality;
● three(3) for brand leadership;
● five(5) for brand image; and,
● six(6) for brand performance.
Hence, overall brand equity in this study was the mean of all items for each of the brand equity asset [Green
and Chen, 2010].
METHODOLOGY
11

13. All items are measured on a 7-point Likert scale (1-strongly disagree and 7-
strongly agree)
METHODOLOGY
Relationship Marketing: “all marketing activities directed towards establishing, developing, and
maintaining successful relational exchange (Morgan and Hunt, 1994).
● Involved of 18 items:
- (3) for trust;
- (3) for commitment; and,
- (3) for satisfaction (the inclusion is based on pilot study)
●Market Orientation: “the organizationwide generation of market intelligence pertaining to current and
future customer needs, dissemination of the intelligence across departments, and organizationwide
responsiveness to it” (Kohli and Jaworski, 1990).
● Involved of 18 items:
- six(6) for intelligence generation;
- five(5) for dissemination; and,
- seven(7) for responsiveness
As dealer’s market orientation in this study was posited to improve the company performance, the overall
market orientation was used to represent the independent variable (Jaworski and Kohli, 1993)
12

14. ANALYSIS AND RESULT
► Sampling characteristic.
► Reliability test represents by Cronbach Alpha ranged from 0.80 to 0.91, and are generally considered
sufficient for research purpose [Nunally, 1978].
► From Table 1, the relationship marketing component, which refers to trust, commitment, and satisfaction,
becomes mediator in the relationship between market orientation and overall brand equity. Interestingly,
satisfaction become the full mediator.
Table 1
Mediating Effect of Relationship Marketing Components on Relationship between Market Orientation and Overall Brand
Equity
Independent Mediating Model 1 Model 2 Result
Variable (IV) Variable (MV) (IV and DV (IV and DV
(RM) without MV) with MV)
Std Beta Std Beta
Market Orientation Trust 0.42* 0.18* Partial
Market Orientation Commitment 0.42* 0.36* Partial
Market Orientation Satisfaction 0.42* 0.20 Full med.
[Note: * p<0.05]
► These findings substantively support hypotheses H2, H2, and H3.
13

15. DISCUSSION AND CONCLUSION
This study investigate the importance of relationship marketing as mediator towards the relationship
between market orientation and brand equity. Interestingly, this study focus on dealers context which
representing the “voice” of customers. From the study, some of interesting findings are highlighted:
► The role of relationship marketing (i.e. trust, satisfaction) as mediator help to conceptualize and
explain how market orientation brings about the development of brand equity
► The study proposed the importance combination of dealer’s brand equity assets (i.e. brand image,
perceived quality, brand leadership, and brand performance) that highlights what customers perceived
about the firm’s brand carried by them.
► For Malaysian automobile firms:
► firms’ encouragement of their dealers to be market-oriented companies is vital in influences the
formation of brand equity for the brand they carry. But, the effectiveness of dealers’ market orientation in
developing the brand equity only occurs through the presence of strong dealers’ satisfaction, trust and
commitment towards their firm.
► without successful managing relationship marketing components such as satisfaction, trust, and
commitment, the firms unable to boost the equity of their brands.
► hence, by considering the crucial role of relationship marketing, focusing on relationship marketing
activities by Proton, the first Malaysian national automobile have resulted Proton in generating better
performance than before. Proton’s market position for 2011 is only 5.2 percent behind Perodua, the
Malaysia automobile leader (Keller, 2013).
15

16. THE END