BRAND EQUITY AND SALES PERFORMANCE (A SURVEY OF SELECTED MANUFACTURING COMPANIES IN PORT HARCOURT

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CHAPTER ONE

INTRODUCTION

1.1            Background Of The Study

Brand equity is a valuable intangible asset for many successful companies in marketplace competition (Voleti, 2008).The brand equity generates a type of added value for products which help companies’ long term interests and capabilities (Chen, 2008).  Establishing strong brand is a strategic priority for many companies since general beliefs indicate that powerful brands can be a strength point and a competitive advantage for companies in their target markets. Therefore, brand distinguishes product from a similar one and penetrates into the way of consumers’ perception and cognition.

When brand Elements are ideal in consumers’ minds, brand equity is deemed positive and it is considered as negative if it is not ideal in their minds (Amini, 2010) This competitive advantage is seen in the format of product ideal price, increasing the productivity of marketing strategies, increasing profit margin and cash flow, rising in demand and customers’ satisfaction, facilitating brand expansion, bargaining power, less risk-taking than rivals(Bekhradi, 2009), entry-barriers, and retaining customers, reducing customers’ gaining costs and value-generation for shareholders (Laboy, 2005). As brand strength increases, industrial buyers become more likely to repurchase and pay a price premium (Bendixenetal., 2004; Roberts & Merrilees, 2007; Taylor & et.al, 2007). Higher brand reputation would lead to more assurance of the Industrial product quality (Cretu & Brodie, 2007). The importance of brand equity to business performance has been widely recognised in the literature (e.g. O’Cass and Ngo, 2007; Hooley et al., 2005); specifically, it is considered as main capital for many businesses (Kim and Kim, 2005), and brand equity as one of the market-based assets is expected to generate profitability (Srivastava, Shervani, and Fahey,

2008). Past studies on marketing activities and sales indicate that marketing activities and sales have significant impact on business performance (e.g.: Hooley et al., 2000; Jaworski and Kohli, 2003; Narver and Slater, 2000; Sandvik and Sandvik, 2003). The most recent study of Homburg and Jensen (2007) suggests that market performance is enhanced if each of marketing and sales play their specific roles. That is, marketing emphasises product and longterm

orientation; while sales focuses on customer and short-term orientation. Apart from the direct impact of brand equity on business performance (e.g. Kim and Kim, 2005; Matear, Gray, and Garrett, 2004; Seggie, Kim, and Cavusgil, 2006), brand equity can be considered as a mediating variable in the relationship between marketing, sales, and business performance.

Borghini and Cova (2006) explain that Brand equity is a basis for sellers’ cultivating relationships with buyers. Webster and Keller (2004) also explain that sellers with higher brand equity are more likely to develop and maintain their relationships with buyers. A strong brand helps sellers to reinforce their control over the relational exchange with buyers in sum, brand equity is instrumental to making the buyer–seller relationship stronger, and in turn, this stronger relationship leads to the higher brand equity (Kim & Hyun, 2011).When the brand equity of a product is high enough, target buyers behave positively towards the product. For example, they pay more for the product, purchase it repeatedly, and engage in favorable word-of-mouth behaviors, and so on. In this respect, a firm can enhance its competitive position and increase financial performance by making its brand stronger (Keller, 2008).  Beside of Brand equity, marketing mix concept determines organization performance path by using controllable variables in where it has many uncontrollable factors (e.g., market) (darani, 2010; Jandaghi & et.al, 2011b, p.5). Costumer purchase persuasion can be stimulant or synthetic of under control or out of control stimulants (Agrawal & Schmidt, 2003, p.34). Costumers’ loyalty is the result of strategic and favorites marketing activities as well as the environmental impacts and marketing affairs potentially lead to alter costumer behavior (Taylor, 2004, p.218). This loyalty, on one hand, causes to repurchase that expands the product market share, and on the other hand, provides situations that lead to higher pricing brand (Chaudhuri & Holbrook, 2001, p.92). Brand equity and marketing strategy have mutual relationship. As jandaghi & et.al (2011a) and Seyyed Javadein & et.al (2011) imply that Brand equity has a considerable importance in marketing strategy and it has vital role in attracting, retaining, and supporting customer. Brand equity has strategic role and importance in gaining competitive advantage and corporations strategic management decisions.

The brand equity is a tool which helps consumer in such situations (Amini, 2010). Then, in order to direct this subject, we pay to assay effectiveness of marketing strategies in framework of mix marketing in direct to create positive corporate image and powerful brand equity in order to obtain sustainable position and competitive advantage in market and increase their productivity of performance.

1.2 Statement of Problem

Despite of tremendous tendency to brand equity, few conceptual developments and experimental researches are implemented to found that which of the marketing activities create brand equity (Barwise, 2003). Until now, identifying brand equity is mainly emphasized and its resources and development are ignored. Brand equity plays a very important role towards manufacturing companies. The impact of brand equity reflected the company’s sales and also marketing performance. There is limited study on the impact of the brand equity on firm performance in Port Harcourt. Brand is the intangible asset. It’s hard to numerate the return of investment for brand name. It is interesting to know whether the strategies of the company are successful to create the strong brand name. Based on the above, the study will explore the interactive relationship between brand equity management and Sales performance.

1.3 Purpose of the Study

The main purpose of the study is to examine Brand Equity and Sales Performance. The specific objectives of the study are:

1)     To examine the relationship between Perceived quality and Sales performance of manufacturing companies in Port Harcourt.

2)     To examine the relationship between Brand Loyalty and Sales performance of manufacturing companies in Port Harcourt.

3)     To examine the relationship between Brand Awareness and Sales performance of manufacturing companies in Port Harcourt.

1.4 Research Questions

The following research questions will guide the study.

1)     To what extent does Perceived quality enhances Sales performance of manufacturing companies in Port Harcourt?

2)     To what extent does Brand Loyalty enhances Sales performance of manufacturing companies in Port Harcourt?

3)     To what extent does Brand Awareness enhances Sales performance of manufacturing companies in Port Harcourt?

1.6 Hypotheses

The following hypothesis will be used in guiding the analysis of our findings

Ho₁. There is no significant relationship between Perceived Quality and Sales Volume.

Ho₂. There is no significant relationship between Perceived Quality and Repeat Purchase

H0₃. There is no significant relationship between Brand Loyalty and Sales Volume

H0₄. There is no significant relationship between Brand Loyalty and Repeat Purchase

H0₅. There is no significant relationship between brand Awareness and sales Volume.

H0₆. There is no significant relationship between brand Awareness and Repeat Purchase.

1.7 Significance of the Study

The study will benefit the owner, merchant or managers in manufacturing to understand the causal relationship between firm brand equity and stock price of company. The rationale of this research is to provide efficient information. For the component of brand equity and helps the firms to determine the factor of brand image that will reflect the stock price of company. The empirical results of this study can help the Rivers State listed company to manage the brand name of their company or product.

1.7 Scope of Study

The general scope of this study covers Brand Equity and Sales Performance. The geographical scope is Rivers State of Nigeria.  The study will be limited to selected manufacturing companies in Port Harcourt

1.8   Definition of Terms

Brand Equity is a systemic managerial process for creating, maintaining, and developing relationships with customers in every position in order to maximize relationship value.

Marketing performance: refers to the improvement of the organizational status in the market (market share), improvement of the customers’ perception of organization and its products, and increase in their loyalty toward organization

Sales growth: The increase in sales over a specific period of time, often but not necessarily annually.

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