Journal of International Business Research and Marketing
Volume 7, Issue 1,November 2021, pages 7-16
The Effect of Marketing Communication on Brand Equity with Brand Image, Brand Trust, and Brand Loyalty as the Intervening Variables
1 Sri Murtiasih, 2 Budi Hermana, 3 Wiarsih Febriani
1,2,3 University Gunadarma Fculty Of economic Departement Of Mangement, Jakarta, Indonesia
Abstract: An enterprise organization need good brand equity to survive in a fiercely competitive market. Marketing communication plays an important role in establishing brand equity. The study aims to analyze the effect of Marketing Communication that consists of advertising, sales promotion, and eWOM on brand equity with brand image, brand trust, and brand loyalty as the intervening variables. This study employs a quantitative method with a sample of 314 respondents, who are consumers of smartphones. The data is analyzed with SEM technique with Amos 21 application. Results of the study indicate a significantly positive effect of advertising and eWOM on brand image. eWOM exerts a larger effect on brand image than advertising. However, sales promotion does not affect brand image. Sales Promotion and eWOM have a significantly positive effect on brand trust, while advertising has a significantly negative effect on brand trust. Brand trust has a significantly positive effect on brand loyalty. Nevertheless, the brand image does not affect brand loyalty. Meanwhile, brand loyalty has a significantly positive effect on the brand equity of smartphone products purchased by consumers. Of the three variables of marketing communication studied, eWOM has the largest indirect effect on brand equit.
Keywords: Marketing Communication, Advertising, Sales Promotion, eWOM, Brand image, Brand Trust, Brand Loyalty, Brand Equity.
To win the competition, marketers/producers of the smartphone have to exercise good marketing communication. Marketing communication is a tool used by enterprises to inform, persuade, and remind consumers directly or indirectly about their products and brands (Kotler and Keller, 2012). Marketing communication plays an important role in developing brand image (Narayanan and Manchanda, 2010). Communication on a brand will improve awareness and memory. Therefore, customers will purchase the satisfying brand to an optimal level (Sääksjärvi and Samiee, 2011). The products that are introduced will be primarily purchased by consumers when they decide to purchase a product. Marketing communication is closely associated with brand image and brand trust. Consumers’ perception of a particular brand is reflected in the brand association in consumers’ memory (Kotler and Keller, 2013). Perception of a brand is formed by consumers’ previous information and experience with the brand. Brand image is very important to affect brand trust. Brand image can affect a long-term profit and enhance consumers’ desire to purchase products at a premium price, improve share’s market price, create competitive advantage, and ensure marketing success (Yoo & Donthu 2001). Therefore, brand image leads to brand loyalty.
Customer loyalty can be sustained when brand trust is maintained appropriately. A trusted brand is a brand that consistently meets the promises to customers through superior performance. Doing that way implies that customer brand loyalty is ensured (Chiou and Droge, 2006). This implies that brand trust also leads to brand loyalty. Moorman, Zaltman, and Deshpande (1992) suggested that trust and loyalty have to be interrelated since trust is an important key to developing a consumers’ commitment or loyalty to the enterprise.Brand loyalty has some strategic benefits for enterprises. They may include larger market share and new customers, brand expansion, reduced marketing cost, and brand strengthening against the competition. A larger number of loyal customers will generate profits for enterprises because it will serve as the fort for enterprises and a barrier for other companies to enter the market. It also serves as the basis for determining the premium price, the timing for competitive innovation. Equally important, it protects the enterprise from destroying price competition (Atilgan et al, 2005). Brand loyalty is the core of brand equity (Tong and Hawley, 2009). According to Aaker (1996), brand loyalty is the core dimension of brand equity. Brand loyalty is found to have a dominant effect on brand equity that leads to a high level of brand equity (Yasin et al. 2007). Therefore, brand loyalty has to be enhanced to improve Brand equity (Mishra and Datta, 2011), (Murtiasih et al. 2014).
2. Literature Review
Marketing communication is a tool for enterprises to inform, persuade, and remind consumers either directly or indirectly about the products and brands that they sell. This implies that marketing communication represents the “voice” of the enterprises and the brand of the enterprises. It can also serve as a tool to develop a dialog and communication with (Kottler and Keller, 2009). Promotion is the most important component in the marketing mix and is a type of communication to consumers. Promotion includes the use of advertisement, sales promotion, personal selling, and publicity. The advertisement presents information non-personally on the mass media concerning a particular product, brand, enterprise, or shop. Promotion affects the image, belief, and attitude of consumers to particular products and brands, and in turn, affects their purchase behavior (Evans & Raaij, 1996).
Kotler and Keller (2012) suggested that sales promotion is a short-term incentive to encourage the sales of goods or services. In other words, sales promotion is a tool to encourage consumers to purchase goods or services. There is a different perception between the message delivered by the marketers and the message received by consumers. This is a challenge that marketers have to address in planning a brand massage that will be communicated to the target market (Doyle, 1998). Therefore, the identity of a brand is represented by a brand through some appearances of products, names, symbols, advertisements, etc. The brands identity is closely associated with brand image because brand image refers to the perception of consumers on a brand.
Keller (2003) suggested that a positive brand image can be developed by connecting brand association which is unique and strong to consumers’ memory about a brand and be supported by an effective marketing campaign. Jalilvand and Samiei (2012) studied the effect of eWOM on brand image and purchase intention in the Iranian car industry they found that eWOM is one of the most effective factors that affect the brand and purchase intention. Positive eWOM help improve customers’ purchase intention, create a favorable image of an organization and the brand, and reduce promotion cost. Likewise, the study conducted by Torlak et al. (2014) found that brand image has an important effect on the purchase intention of smartphone brands through eWOM. Elseidi and El-Baz (2016) suggested that e-WOM has a significantly positive effect on brand image, consumers’ brand attitude, and purchase intention.
Results of the studies indicate the effect of marketing communication on brand image. Ahmad (2016) proved that IMC dimensions (advertising, personal selling, public relation, and WOM) have a positive effect on the brand image of private hospitals, and only one dimension, that is sales promotion, has no effect on brand image.With that in mind, we could propose that:
H1: Advertising affects brand image
H2: Sales Promotion affects brand image
H3: eWOM affects brand imageTrust is a distinguishing factor in the online shopping (Hoffman, Novak, & Peralta, 1999). This is particularly true when consumers use the recommendation of agents and other types of decision-making tools on the Internet (Dabholkar, 2006). consumers may doubt and question if the recommendation of an agent represents the need of consumers or vendors. Results of the studies indicate that consumer in the interaction with the supplier of service improves consumers’ trust. Su and Rao (2010) suggested that brand communication has exposed the out lookers to brands. The effect is improved awareness and memory. Therefore, customers will purchase satisfactory brands to the optimal level (Sääksjärvi and Samiee, 2011). Satisfaction with the performance of the brand may result in a positive brand attitude (Shankar, Azar, and Fuller, 2008). Low and Lamb (2000) revealed that brand attitude refers to the bond between consumers and brands that leads to brand trust and brand loyalty (Hoek et al, 2000). For that reason, clever marketers will take the necessary effort to build brand communication to create and sustain a positive attitude of customers to their brand. Therefore, a higher level of brand communication made by marketers will lead to higher expected customer trust with the brand. Previous empirical evidence has found a positive association between brand communication and brand trust (Su and Rao, 2010).
With that in mind, we could propose that:
H4: Advertising affects brand trust
H5: Sales Promotion affects brand trust
H6: eWOM affects brand trustBrand image is often reflected by perceived brand associations in customers or customers’ memory (Lee & Tan, 2003). Brand image may serve as an important proxy for intrinsic products and information attribute that in turn encourages customers to trust the brand (Pavlou, Liang and Xue, 2007). When customers have a higher self-confidence in using a brand, it is more likely that they will trust the brand. Previous studies found results that support the positive correlation between brand image and brand trust (Cretu and Brodie, 2007). A favorable brand image will enhance customer trust that may lead to high brand trust (Del Rio et al., 2001; Keller, 1993).
Other studies also indicate that brand image has a significantly positive association with brand trust and a good brand image in customers’ minds will lead to higher brand trust (Deheshti, Firouzjah, Alimohammadi, 2016). Other researchers such as Alhaddad (2015), Roets, Bevan-Dye, and Viljoen (2014), and Liao, Chung, and Widowati (2009) have also found a similar positive association between brand image and brand trust.
With that in mind, we could propose that:
H7: Brand image g affects brand trustBrand Image is an abstract description of products deriving from the marketing activities and interaction of market perception. Image may affect customer perception about goods or services offered (Fanany, 2015). A reputable brand name may reflect the benefits of a product and simplify the recall of the advertised benefits when compared to other less reputable brand names (Keller, 2003). There are many less reputable brand names and preferences in the market. Consumers may prefer reputable and recognized brand names. Prestigious brand name and good brand image will attract more consumers to purchase the brand and establish repeated purchase behavior and reduce price-related brand shift (Cadogan and Foster, 2000). According to Keller (2003), a principally positive brand image may improve the likelihood of brand favor. Brand image association underlies consumers’ decision to be loyal to the brand.With that in mind, we could propose that:
H8: Brand image has an effect on brand loyaltyAccording to Agustin and Singh (2005), trust reduces uncertainty in the environment where consumers feel vulnerable. In that way, consumers can rely on a trusted brand. When a brand can consistently meet the best interest and expectations of customers, customers are more likely to trust the brand. For example, customers will conclude that when a brand is functionally trusted when it has a credible quality or good safety before they decide to trust the brand (Bart, et al., 2005). Therefore, brand trust is a result of a process of feeling and thinking appropriately about a brand and may be seen as the effect of reliability and credibility (Chaudhuri and Holbrook, 2001). They may return and repurchase is strengthened and finally result in the attitude and behavior of brand loyalty for further purchases (Delgado et al., 2003). Consequently, a trusted brand consistently sustains the brand to the customers through superior performance. Therefore, customer loyalty to a brand has been established (Chiou and Droge, 2006). Therefore, higher customers’ trust in a brand will result in higher expected customer loyalty to the brand. Previous empirical pieces of evidence have found a positive association between Brand trust and brand loyalty (Morgan and Hunt, 1994; Doney and Cannon, 1997; Chiou and Droge, 2006), and brand trust is expected to create brand loyalty.
and Canon (1997) explained that developing trust which is relatively difficult and takes a long time will contribute significantly to the relationship between sellers – buyers and will improve loyalty. Further Lau and Lee (1999) explained that trust is an important tool to develop and maintain the relationship with customers in the long term. Trust (trust or belief) is the belief that other people’s or group of people’s action is consistent to their trust (Dabholkar & Sheng, 2012).
Brand Trust results from the performance of the brand and the ability of the brand in meeting customers’ expectations and developing customers ‘satisfaction (Firouzjah, Alimohammadi, 2016). Because of the importance of brand trust in improving brand loyalty, consequently lower brand trust will reduce brand loyalty to the goods or services to be purchased. On the contrary, higher brand trust will lead to brand satisfaction and loyalty.
According to Deheshti, et al. (2016) developing and maintaining customers’ brand trust is one of the most important marketing programs for enterprises, especially in the competitive and unpredictable market where product differentiation is low. To create brand loyalty it is necessary to develop consumers ‘intention through brand trust and organizational trust. Brand trust leads brand loyalty (Delgado-Ballester & Munuera-Alemán, 2001). This is particularly true because brand trust can create a valuable relationship (Chaudhuri & Holbrook, 2002). It indicates that brand loyalty is a part of the sustainable process of a valuable and important relationship resulting from the brand trust. Other researchers also indicate support that brand trust is the determinant of loyalty (Wu et al., 2008) and (Berry, 1983).With that in mind, we could propose that:
H9: Brand image has an effect on brand loyaltyHigh affiliation to a brand is known as brand loyalty (Naghibi & Sadeghi, 2011). Customers’ desire to repeat the purchase of products is brand loyalty, although other brands are also available in the market (Rajagopal, 2010). However, the behavior of consumers is very different in different cultures. Some people have a better brand awareness than others (Mooij & Hofstede, 2011). According to Tong & Hawley (2009), the core of brand equity is brand loyalty. Meanwhile, Kim et al (2008) claimed that brand loyalty is a kind of high dedication to obtain or use goods or services that they like repeatedly in the future. The customers’ decision to purchase the same products is mostly affected by brand loyalty (Wahid et al., 2011). Ling et al., (2014) suggested that Loyalty requires that loyal customers may be willing to receive anything. They are willing to pay for goods at any price and there is a very high switching cost to other brands. Therefore to improve brand equity, we have to improve Loyalty (Mishra & Datta, 2011).With that in mind, we could propose that:
H9: Brand loyalty has an effect on brand equity
The questionnaires of the research were initially developed in English and then translated into the Indonesian language. The questionnaires were distributed to thirty respondents for the pre-test samples before they were distributed to all respondents.4. Results and Discussion
Respondents were asked to assess all the items, using a five-point Likert scale, ranging from “1 – strongly disagree” to “5 strongly agree”. Questionnaire of advertising was adopted from the study of Sundeed, Sajjad, Ahsan, Qaira, Muzzammil, and Mazher (2017), the questionnaire of sales promotions was developed from the theory introduced by Kotler & Armstrong (20…), the questionnaire of eWOM was adopted from the study of Bambauer-Sachse and Mangold, (2011); Goyette et al (2010). The questionnaire of brand trust was adopted from the study of Azize, Cemal, Hakan, (2012), the questionnaire of the brand image was adopted from the study of (Hoeffler and Keller, 2003, the questionnaire of brand loyalty was adopted from the study of Yoo et al (2000), Yasin (2007), whereas questionnaire of brand equity was adopted from the study of Yoo, et al (2000), Yasin, (2007)
The reliability of the research instrument is measured by Cronbach α, while the validity is measured by Average Variance Extracted (AVE). The measurement model with five latent variables is presented in Table 2.
Composite reliability (CR) is used to measure construct reliability in the model. Table 2 indicates the CR of advertising of 0.899, sales promotion of 0.905, eWOM of 0.854, brand image of 0.970, brand trust of 0.957, brand loyalty of 0.883, and brand equity of 0.948. So it identified that in the measurement model all constructs have good reliability. The convergent validity indicates the extent to which a particular construct indicator has a generally high variation percentage (Hair et al., 2010). All variables indicate AVE value of higher than 0.70. The AVE for advertising is 0.830, while it is 0.837 for sales promotion, 0.374 for eWOM, 0.874 for brand image, 0.874 for brand trust, 0.845 for brand loyalty, and 0.867 for brand equity. It can be concluded that the indicators that constitute the latent variable have indicated good results.
Figure 1: Path Analysis of SEM Model
The goodness of Fit of Inner Model
Before performing further analysis, it is necessary to have statistical testing for SEM model comprehensively. The objective of the testing is to identify if the model is in general fit to the existing sample data and to identify how appropriate the observed variables can explain the latent variable. Results of output goodness of fit statistics deriving from the SEM model are presented in Table 3.
Based on the results of output goodness of fit statistics from the software of Amos 22 and the discussion about the goodness of fit, it can be said that SEM model with the software of AMOS 22 developed in this research is a good model as we can see in Table 3. The ratio of χ2/df is 2.375, normed fit index (NFI) with the value of 0.863, Relative fit index (RFI) 0.854. The incremental fit index (IFI), Tucker-Lewis index (TLI), and comparative fit index (CFI) all have a value above 0.9, which means they have a good fit. The root mean square error of approximation (RMSEA) with the value of 0.66, which is 0.05 ≤ RMSEA ≤ 0.08 indicates a good fit (Brown & Cudeck, 1993). Therefore, it can be said that the model developed to test the effect of social media usage and eWOM on purchase decisions mediated by perceived usefulness and trust are all Good Fit.The structural model, including the research hypotheses and paths, was examined using the maximum likelihood estimation procedure. The structural model reveals adequate goodness of fit with the data as presented in Table 4.
The effect of Advertising on Brand Image
Table 4 presents the results of the testing of the first hypothesis. They indicate that the correlation between advertising and brand image has shown a P-value of ***, and a regression coefficient of 0.37. the results imply that advertising has a significantly positive effect on brand image, where a higher rate of advertising will lead to a higher brand image of smartphone. Or in other words, hypothesis one (H1) that predicts the effect of advertising on brand image is accepted.Advertising is an effective driving power for a brand to deliver messages from marketers to consumers. Frequent display of creatively and attractively prepared advertising in different media will be more likely to be easier to remember and thus will create a positive perception of the smartphone brand. advertising as one of marketing communications can be used by marketers to develop dialog and relationship with consumers, as well as deliver a new identity of brand through the product appearance, name, symbol, etc. brand identity is closely associated with the brand image since brand image refers to consumers’ perception on a brand. The results of this study are in line with the studies conducted by Fard and Farahani (2015), Ahmad (2016), Thaichon et al (2013), and Martin (2017).The effect of Sales Promotion on Brand Image
Results of the testing of the second hypothesis indicate that the correlation between sales promotion and brand image has a P value of 0.164 and a regression coefficient of 0.09. this result implies that sales promotion does not have any significant positive effect on brand image, where sales promotion for smartphone products does not improve brand image. Or in other words hypothesis two (H2) predicting that there is an effect of sales promotion on brand image, is rejected. this study indicates that enterprises that offer promotion programs to encourage customers to purchase as soon as possible, offer special promotion at a particular time (such as giving a discount and prize, launching a special edition, practicing interest-free credit purchase), does not have any effect on the brand image of smartphone. In this study, because the age of the respondents belongs to generation Z, they are more likely to be fanatics involving a particular smartphone brand and accordingly will purchase without expecting a special program of sales promotion. This is in line with the study conducted by Ahmad (2016) that indicates that among the variables of marketing communication only sales promotion does not affect brand image, different from the results of the studies conducted by Thaichon et al (2013), Fard and Farahani (2015), Martin (2017) that indicate the significant effect of all variables of marketing communication on brand image.The effect of eWOM on Brand Image
Results of the testing of the third hypothesis indicate that the correlation between the electronic word of mouth (eWOM) and brand image has a p-value of ***, and regression coefficient of 0.39. this implies that eWOM has a significant effect on brand image. A higher rate of positive eWOM information will improve the good image of the brand of smartphone. Or in other words, hypothesis three (H3) predicting that there is an effect of eWOM on brand image is accepted. Among the three variables of marketing communication, the variable of eWOM has the largest effect on brand image.This study indicates that online good and positive talk that recommend and review the brands of the products of Smartphone will affect the brand image of the smartphone. This is in line with the study conducted by Jalilvand (2012) Thaichon et al (2013), Fard and Farahani (2015), Ahmad (2016), and Martin (2017).The effect of Advertising on Brand Trust
Results of the testing of the fourth hypothesis indicate that the correlation between Advertising and brand trust has a P-value of 0.018, and a regression coefficient of -0.12. this result implies that advertising has a significantly negative effect on brand trust, where a higher rate of advertising will decrease the level of brand trust in the smartphone. Or in other words, hypothesis four (H4) predicting that there is an effect of advertising on brand trust is accepted.this study indicates that larger expense and intensity of advertising of the smartphone products will decrease public trust in the smartphone brand. This is because trust is developed with the expectation that other parties will behave to meet the need and desires of consumers. High expenditure on advertising in consumers’ perception implies that the brand fails to meet their needs and intentions. Consumers perceive how much the brand can meet the promise delivered in the advertisement. Although marketers intensely advertise the products, consumers’ trust declines.
The finding is in contrast to the finding of the previous studies conducted by Torlak et al. (2014), Fard and Farahani (2015), Sadek and Tantawi (2016), Bakator, et al (2017) all of which suggested the presence of the positive and significant effect of advertising on brand trust.
The effect of Sales Promotion on Brand Trust
Results of testing of the fifth hypothesis indicate that the correlation between sales promotion and brand trust has a p-value of ***, and regression coefficient of 0.19. This result implies that sales promotion has a significant effect on brand trust. sales promotion for smartphone products may improve brand trust. Or in other words hypothesis five (H5) suggesting the correlation between sales promotion and brand image, is accepted.this study indicates that enterprises that offer promotion programs to encourage customers to purchase as soon as possible, provide special offers at a particular moment (such as discount, prize, launching of a limited and special edition, interest-free credit purchase), affect consumers’ trust in the smartphone brand. Of the three variables of marketing communication, sales promotion has the largest effect on brand trust. A short-term promotion program is more likely to improve consumers’ trust in the smartphone brand because, in reality, the promotion can directly be proven. This finding is in line with the studies conducted by Thaichon et al (2013), Fard and Farahani (2015).The effect of eWOM on Brand Trust
Results of testing of the sixth hypothesis indicate that the correlation between the electronic word of mouth (eWOM) and brand trust has a P-value of 0.003, and a regression coefficient of 0.15. This result implies that eWOM has a significant effect on brand trust, where higher eWOM will result in a higher brand image of smartphone. Or in other words, hypothesis six (H6) predicting the effect of eWOM on brand trust is accepted.
eWOM is the media to deliver various kinds of information and talk to many people through the web or blog. Good and online positive talks that recommend and review products or brands of smartphones will affect brand trust smartphone because consumers have got information from the web and feel sure and trust the review of the people who have tried the products. therefore, positive eWOM improves Brand Trust. This is in line with the studies conducted by Thaichon et al (2013), Fard and Farahani (2015).The Effect of Brand Image on Brand Trust
Results of testing of the seventh hypothesis indicate that the correlation between brand image and brand trust has a p-value of ***, and regression coefficient of 0.77. This result implies that brand image has a significant effect on brand trust, where a brand image of the smartphone products can improve brand trust. Or in other words, hypothesis seven (H7) predicting the effect of between brand images on brand trust, is accepted.
this study indicates that the type of association in the minds of the consumers when they recall the smartphone brand has an effect on consumers’ trust in the brand. this study indicates that a higher level of consumers’ association that a brand has a good reputation, nice appearance, and shape, sophisticated technology, much benefits, high quality, a unique feature, good impression, prestigious use, easy recall, and pronunciation will lead to a higher level of consumers trust to the smartphone brand. Consumers’ higher perception of the reliability, uniqueness, and strength of the smartphone brand, will exert stronger trust in the smartphone brand. This is in line with the studies conducted by (Deheshti, Firouzjah, Alimohammadi, 2016) that suggested the positive and significant association of trust brand and brand image among the customers and higher brand trust. Other researchers such as Alhaddad (2015), Roets, Bevan-Dye, and Viljoen (2014), and Liao, Chung, and Widowati (2009) have published the results of similar studies, that is the positive effect of brand image on brand trust.
The effect of Brand Image on Brand Loyalty
Results of testing of the eight hypotheses indicate that the correlation between brand image and brand trust has a p-value of 0.308 and regression coefficient of -0.12. This result implies that brand image has no effect on brand loyalty. Consumers’ brand image on the smartphone has no effect on consumers’ loyalty to the smartphone brand. Or in other words hypothesis eight (H8) predicting the effect of brand image on brand loyalty, is rejected.
this study indicates that the association in the mind of consumers when recalling the smartphone brand has no effect on consumers’ trust in the brand. In this study consumers’ association to the good reputation, attractive appearance, sophisticated technology, abundant benefits, good quality, a unique feature, good impression, prestigious use, easy recalling, and pronunciation do not have a direct effect on consumers’ loyalty to the smartphone brand. this study indicates that consumers’ perception about a brand has no direct effect on consumers’ loyalty to the brand through consumers’ brand trust to the purchased smart hone. This result is in contrast to the results of the studies conducted by Jian (2004), Anwar, A., et al. (2011).
The effect of Brand trust on Brand Loyalty
Results of testing of the ninth hypothesis indicate that the correlation between brand trust and brand loyalty has a p-value of ***, and regression coefficient of 0.83. This result implies that brand trust has a significant effect on brand loyalty, where higher brand trust will correlate to higher brand loyalty to the smartphone. Or in other words hypothesis nine (H9) predicting that there is an effect of brand trust on brand loyalty, is accepted.
Brand trust is a key variable in the development of wants and maintenance of brand relationships in the long term with the consumers. this study indicates that improvement of brand trust in consumers with the belief that the brand is reliable, sell products as promised, the brand quality is consistently maintained, the brand that helps consumers solve their problems, the brand that meets the need of consumers, the brand ensures customers’ value and satisfaction, have an effect on the improvement of consumers’ loyalty to the smartphone brand.
The large value of regression coefficient (0.983) between brand trust and brand loyalty implies that higher consumers’ trust in the smartphone brand will lead to higher consumers’ loyalty to the brand. Loyal behavior is reflected in the willingness of consumers to pay a higher price, making the brand the primary preference, and consistent reliance on the brand. Results of this study strengthen previous studies conducted by Berry (1983), Delgado et al, (2001), Chaudhuri & Holbrook, (2002). Jian (2004), Wu et al., (2008); and Anwar, et al (2011), all of which indicate a positive and significant association between brand trust and brand loyalty.
The effect of Brand Loyalty on Brand Equity
Results of the testing of the tenth hypothesis indicate that the correlation between brand loyalty and brand equity has a p-value of *** and the regression coefficient of 0.89. This result implies that brand loyalty has a significant effect on brand equity, where higher brand loyalty leads to the higher brand equity of the smartphone. Or in other words hypothesis ten (H10) predicting the effect of brand loyalty on brand equity, is accepted.
this study indicates that improvement of loyalty consumers shown by the brand preference, wiliness to pay a higher price than that of other brands, unwillingness to purchase other brands when the brand is absent on the shop shelf, heavy consideration before purchasing other similarly wanted brands of the smartphone, and willingness to pay at any price to purchase the favorite smartphone brand, will affect the improvement of brand equity of the smartphone.
the regression coefficient value of 0.89 indicates that stronger brand loyalty will lead to stronger brand equity, because loyal consumers do more likely not to shift to other brands. This is in line with the studies conducted by Ling et al., (2014) that suggested that loyal customers are willing to receive anything and pay at any price for a brand (Mishra & Datta, 2011). Murtiasih, et al (2014) suggested that improvement of brand loyalty will improve brand equity.
Advertising and eWOM have significantly positive effects on brand image. However, sales promotion has no effect on brand image. eWOM has the largest effect on brand image. It means that positive information delivered through eWOM will further improve the good image of the smartphone brand. Advertising has a negative and significant effect on brand trust. Higher advertising intensity will result in lower brand trust. Sales promotion and eWOM have a positive effect and significant on brand trust. Sales Promotion has the largest effect on brand image. Marketing communication with short-term incentives provides direct incentives to the consumers of smartphone. Therefore, the brand trust gets stronger.
Brand image has a positive and significant effect on brand trust. Improvement of positive association to a smartphone brand can improve consumers’ trust in the smartphone. Better association or brand image perceived with strength, uniqueness, and reliability of products will improve consumers’ trust in the smartphone brand. Brand trust has a significantly positive effect on brand loyalty. Improvement of consumers’ trust in brand shown by the belief that the sold products meet the promise, the brand quality is consistently maintained, and consumers’ satisfaction is well addressed will improve consumers’ loyalty to the smartphone brand. Meanwhile, the Brand image has no direct effect on brand loyalty. However, brand image constitutes consumers’ brand trust. the brand trust further has an effect on consumers’ loyalty to the smartphone brand.
Brand loyalty has a significant effect on brand equity. stronger brand loyalty will improve brand equity because loyal consumers will not more likely shift to other brands. Of the three variables of marketing communication, eWOM or positive information has the largest indirect effect on brand equity.
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