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MIP 29,3

Brand loyalty in emerging markets

Tho D. Nguyen
Faculty of Business Administration, University of Economics, HCM City, Vietnam and College of Business, University of Western Sydney, Sydney, Australia, and

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Received February 2009 Revised September 2009 Accepted February 2010

Nigel J. Barrett and Kenneth E. Miller

Faculty of Business, University of Technology, Sydney, Sydney, Australia
Abstract
Purpose This paper seeks to compare some key antecedents of brand loyalty between two emerging markets: Thailand and Vietnam. Design/methodology/approach Using a sample of 603 female consumers of international shampoo brands, including 304 consumers in Bangkok, Thailand and 299 users in Hanoi, Vietnam, a model was tested that incorporates key determinants of brand loyalty perceived quality, brand awareness, advertising attitudes, and distribution intensity by means of structural equation modeling. Findings The paper found that there are positive relationships between perceived quality and brand loyalty, between brand awareness and perceived quality, between advertising attitudes and brand awareness, and between distribution intensity and brand awareness in both markets. However, the relationship between brand awareness and brand loyalty was found only in the Vietnamese market, and the relationship between advertising attitudes and perceived quality was only found in the Thai market. Finally, no relationship between distribution intensity and perceived quality was found in either market. Research limitations/implications A major limitation of this study is the examination of only one concept that stands for strong brands, i.e. brand loyalty. Several other concepts, such as brand relationship quality and brand impressions, should be investigated in future research in order to compare and contrast with those found in advanced economies. Practical implications The results of this study suggest that managers of international brands in emerging markets should recognize the differences between markets in order to design effective loyalty programs for each market. Originality/value A major contribution of this study is to empirically compare the impacts of perceived quality, brand awareness, advertising attitudes, and store image on brand loyalty in two emerging markets: Thailand and Vietnam. Keywords Brand loyalty, Emerging markets, Vietnam, Thailand Paper type Research paper

Marketing Intelligence & Planning Vol. 29 No. 3, 2011 pp. 222-232 q Emerald Group Publishing Limited 0263-4503 DOI 10.1108/02634501111129211

Brands play a central role in marketing and have attracted the attention of academics and practitioners over many years (Aaker, 1991; Brodie et al., 2009; Erdem et al., 2006). Accordingly, several perspectives on brands have been found in the literature (Ambler and Styles, 1996). Traditionally, a brand is dened as a name, term, design, symbol, or any feature that identies one sellers good or service as distinct from those of other sellers (Bennett, 1995, p. 17). According to this approach, the brand is viewed as part of a product, and the main function of the brand is to distinguish a rms product from competing products, i.e. it is an identier. A more holistic approach denes a brand as:

[. . .] the promise of the bundles of attributes that someone buys and that provides satisfaction [. . .] The attributes that make up the brand may be real or illusory, rational or emotional, tangible or invisible (Ambler and Styles, 1996, p. 10).

Brand loyalty

In this approach, the product is regarded as a component of the brand. The product simply provides consumers with functional benets, whereas the brand provides consumers with not only functional benets but also with emotional benets, and thus, satisfaction (Hankinson and Cowking, 1996). Consequently, marketing activities of rms have gradually focused more on the brand instead of the product, thereby, leading academics to discover factors that constitute strong brands (Aaker, 1996). However, such attention has occurred mainly in the developed world. Little research has been devoted to the issue in emerging markets. In addition, replication research plays an important role in science. It is a necessary part of knowledge development, nevertheless, it is rarely undertaken in the social sciences, especially in business research (Easly et al., 2000; Hubbard and Vetter, 1996). Replication studies have found that a number of original models were not supported (Darley, 2000). This results in the isolation and fragmentation of the literature (Hubbard and Vetter, 1996). This study attempts to bridge this gap by examining key antecedents of brand loyalty in two emerging markets: Thailand and Vietnam. Specically, it compares and contrasts the role of advertising attitudes, distribution intensity, brand awareness, and perceived quality on consumer loyalty to international brands in these two markets. The paper is structured as follows: introduction to the Thai and Vietnamese markets, conceptual model, methods, results, discussion and implications, and limitations and directions for future research. The markets: Thailand and Vietnam Thailand and Vietnam have a number of similarities as well as differences. In terms of economic development, both markets can be classied as emerging markets in South East Asia. Relative to Vietnam, Thailand is more developed and is a lower-middle-income economy (GDP per capita around US$2,565; TBFR, 2006), whereas, Vietnam is a low-income economy (GNP per capita around US$534; VBFR, 2005). With a population of more than 60 million, and a GDP growth rate of about 6 percent, Thailand is a relatively large market in the region. This has presented opportunities for international marketers, leading to the success of several international brands in the market. For example, in the hair care market, multinational companies (MNCs) such as Unilever, Colgate-Palmolive, and Procter & Gamble are playing a leading role in Thailand. As observed by SPC Asia (2005, p. 11): Its a golden time in Thailand for multinational brands such as Sunsilk and Care Baby Powder. With a population of more than 80 million, and a GDP growth rate of about 7.5 percent annually (VBFR, 2005), Vietnam is also a potential market for international brands. However, Vietnamese consumers are not so familiar with brand consideration and choice. A survey conducted by Taylor Nelson Sofres in 2004 found that up to 47 of percent Vietnamese consumers agree that the country-of-origin is more important than brand names (The Wall Street Journal, 2004). The concept of brands and branding has only recently happened in Vietnam. Most Vietnamese rms have not recognized the importance of brands and branding. Unbranded products, or the use of a companys name as a brand name to distinguish its products from those of competitors, has been a common approach (Nguyen et al., 2003). The new economic reforms introduced by the Vietnamese Government in 1986, in which a key objective has been to attract foreign direct investment, encouraged the entry of several MNCs (such as Procter & Gamble and Unilever)

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into the market in the early 1990s. The brand promotion programs launched by these MNCs have shifted Vietnamese consumers shopping habits from purchasing products to purchasing brands. Accordingly, Vietnamese consumers have tended to become more sophisticated in their consumption behavior, especially in urban areas of the country. For example, surveys by Taylor Nelson Sofres Vietnam in 1999 and 2004 reveal that, in 1999, 54 percent of consumers paid more to enjoy the ner things of life. However, this rate reached 80 percent in 2004. The surveys also indicate that, in 1999, 79 percent of Vietnamese consumers agreed that they often switch brands. However, this rate became 47 percent in 2004 (The Wall Street Journal, 2004). This indicates that some brands have well-established positions in the market. Unfortunately, very little research on branding in this market has been undertaken (Nguyen et al., 2003). Literature review and hypotheses The literature reveals several approaches to evaluating the strength of a brand. Some stem from cognitive psychology, i.e. based on consumer cognitive processes, such as brand awareness, perceived quality, and brand loyalty (Aaker, 1991; Kressmann et al., 2006; Yoo et al., 2000), brand relationship (Aggarwal, 2004; Fournier, 1998; Smit et al., 2007; Veloutsou and Moutinho, 2009; Woodside and Walser, 2007), and brand personality and impressions (Aaker, 1997; Fennis and Pruyn, 2007; Orth and Malkewitz, 2008). Others come from information economics, i.e. based on the signal of the brand to the consumer such as brand credibility, consistency, and clarity (Erdem and Swait, 1998; Erdem et al., 2006). Although the perspectives differ, their common focus is on what makes a brand strong, i.e. the creation of loyal consumers. Among the concepts used to describe a strong brand, brand loyalty is perhaps the one that has received the most attention by academics and practitioners (Malai and Speece, 2005; Tsao and Chen, 2005). For that reason, there are several denitions and measures of brand loyalty; some focus on the attitudinal dimension and others focus on the behavioral aspect of brand loyalty (Gee et al., 2008; Oliver, 1997). In this study, brand loyalty is a deeply held commitment to rebuy or repatronize a preferred brand consistently in the future, despite situational inuences and marketing efforts having the potential to cause switching behavior (Oliver, 1997, p. 392). In most models of brand equity, brand loyalty is posited to be either a component (Aaker, 1991) or an outcome (Erdem and Swait, 1998) of brand equity. Brand loyalty is a valuable asset for every brand. Research has indicated that the cost of recruiting new customers is very high due to advertising, personal selling, establishing new accounts, and customer training (Mittal and Lassar, 1998). More importantly, prots generated by loyal customers increase signicantly over time (Reichheld and Sasser, 1990). Accordingly, research on brand loyalty and its antecedents is still of interest to many researchers (Gounaris and Stathakopoulos, 2004; Tsao and Chen, 2005). In this study, brand awareness, perceived quality, distribution intensity, and advertising attitudes are posited to be key factors that have direct and/or indirect effects on brand loyalty. Figure 1 shows these relationships and hypotheses. Brand awareness and perceived quality There is widespread agreement among researchers that brand awareness is a reliable measure of the strength of a brand (Aaker, 1996). Brand awareness is dened as the strength of a brands presence in the consumers mind (Aaker, 1996, p. 10). High brand awareness,

resulting from brand associations, is a signal of quality that assists consumers in making purchase decisions (Aaker, 1991; Yoo et al., 2000). Therefore, brand awareness can be viewed as an antecedent of brand loyalty. Together, with brand awareness, perceived quality, which refers to the customers perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives (Aaker, 1991, p. 84), plays an important role in the explanation of brand loyalty. Perceived quality is based on the judgment of consumers about the attributes of a brand that are meaningful to them, i.e. it is a perception. When consumers perceive that the brand has high quality compared to other brands in a competitive set, they are likely to put a high value on the brand, driving their purchase and repurchase decisions. However, as mentioned previously, consumers cannot perceive the quality of the brand if they are not aware of it. Consequently, awareness may help consumers become familiar with the brand. Further, familiarity can encourage buying decisions, especially for low-involvement products (Aaker, 1991). Also, it can be argued that awareness is necessary to enable consumers to differentiate a brands attributes from its competing brands. When consumers evaluate a brand in relation to other brands in the competitive set, they recognize the differences among them. The interactions between brand behavior and consumer behavior could be expected to make a strong affective tie with the brand (Fournier, 1998). Therefore: H1. There is a positive relationship between perceived quality and brand loyalty. H2. There is a positive relationship between brand awareness and brand loyalty. H3. There is a positive relationship between brand awareness and perceived quality. Advertising attitudes The attitude of customers toward advertising, which can be dened as a learned predisposition to respond in a consistently favorable manner toward advertising in general (MacKenzie and Lutz, 1989, pp. 53-4), has received considerable attention from researchers and practitioners (Li and Miniard, 2006; Mehta, 2000; Petrovici and Paliwoda, 2007). Advertising is believed to be an effective tool to promote brands. Through advertising, consumers have an opportunity to discover the presence of a brand and its associations. Positive attitudes of consumers toward advertising programs of a brand will stimulate consumers to recognize the distinctiveness of the brand compared to competing brands. In addition, when consumers prefer the brands advertising programs, they intend to search for more information about the brand. Such activities will improve customers attitudes and perceptions about the brand and assist consumers in perceiving the quality of the brand (Mehta, 2000; Villarejo-Ramos and Sanchez-Franco, 2005; Yoo et al., 2000). Therefore:
Advertising attitudes H5 Perceived quality H7 H3 H4 Distribution intensity Brand awareness H2 H1

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Brand loyalty

H6

Figure 1. Conceptual model

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H4. There is a positive relationship between advertising attitudes and brand awareness. H5. There is a positive relationship between advertising attitudes and perceived quality.

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Distribution intensity Distribution intensity refers to the number of intermediaries used by a manufacturer within its trade areas (Frazier and Lassar, 1996, p. 39). It can be argued that the more intensive the distribution of a brand the greater are the opportunities for consumers to become aware of the brand, and subsequently purchase it. Also, the convenience of being able to nd the brand when and where consumers want it saves them time, thus increasing satisfaction and enhancing the brands value (Yoo et al., 2000). Accordingly: H6. There is a positive relationship between distribution intensity and brand awareness. H7. There is a positive relationship between distribution intensity and perceived quality. Method Sample The hypotheses were tested using female consumers of shampoo in Bangkok, the capital city of Thailand, and in Hanoi, the capital city of Vietnam. The unit of analysis of this study was consumers. In Thailand, the decision makers for shampoo are both male and female members of the family. However, in Vietnam, the decision maker for shampoo in the family is female (Nguyen and Nguyen, 2002). Therefore, for comparison purposes between the two markets, female consumers were selected for study. Shampoo was chosen because it is a product that consumers often pay considerable attention to when making purchase decisions due to its perceived value in enhancing their appearance. Six popular brands of shampoo (Pantene, Sunsilk, Rejoice, Head & Shoulders, Kao, and Wella) were chosen for Bangkok, and eight popular brands (Pantene, Sunsilk, Rejoice, Clear, Head & Shoulders, Organics, Double Rich, and Feather) for Hanoi. Convenience sampling was used. The questionnaires, with instructions of how to complete them, were distributed to respondents by an interviewer. In order to minimize possible response bias, instructions emphasized that the study focused only on their personal opinions. There were no right or wrong answers. After completion, the questionnaires were checked and collected by the interviewer. Respondents were chosen using equal quotas for both country and demographic categories: countries (Thailand and Vietnam), age (young and old), education (with and without a bachelors degree), and income (low and high). However, due to some invalid questionnaires which were removed from the sample, the numbers of consumers in the two groups of each category varied slightly. The total sample size was 603, comprising 304 female consumers in Bangkok and 299 female consumers in Hanoi. Table I shows the characteristics of the sample in both countries: Thailand and Vietnam. Measurement There were ve constructs used in this study: brand loyalty, brand awareness, perceived quality, advertising attitudes and distribution intensity. Brand loyalty was measured

by three items assessing the overall commitment of being loyal to a specic brand (Yoo et al., 2000). These items were: I consider myself to be loyal to X; I would not buy other brands if X is available at the store; and, I try to nd X rather than buying other brands. Brand awareness was measured by four items, addressing the degree of brand recognition (Yoo et al., 2000). These items were: I can recognize X among other brands; I know what X looks like; some characteristics of X come to my mind quickly; and, overall, I have no difculty in imaging X in my mind. Perceived quality was measured by four items, asking consumers about their perception of the brand quality (Aaker, 1996). These items were: X would cure my dandruff; X would make my hair silky; X would not make my hair dry; and, overall, X is of high quality. Advertising attitudes was measured by two items, addressing preference of consumers on advertisements. These two items were: the ad of X is very attractive; and, I like the ad of X. Finally, distribution intensity was measured by two items (Yoo et al., 2000): there are many stores that sell X; and, I can buy X everywhere in Bangkok (Hanoi). The questionnaire was developed in English and was then translated into Thai and Vietnamese languages. Back translation was also undertaken to ensure the equivalence of meaning (Brislin, 1970). All items were measured using a ve-point Likert scale, anchored by 1 strongly disagree and 5 strongly agree. Data analysis and results Cross-national measurement validation Before comparing the results from Thailand and Vietnam, congural and metric invariance were tested using multi-group conrmatory factor analysis (CFA; Mullen, 1995; Steenkamp and Baumgartner, 1998). Five constructs were investigated: brand loyalty, brand awareness, perceived quality, advertising attitudes, and distribution intensity. The results indicate that the CFA ve-factor model received a good t to the data: x 2 344.98.52 ( p , 0.001); TLI 0.949; CFI 0.961; and, RMSEA 0.044. These [160] ndings support the congural invariance of the ve-factor model. All factor loadings were substantial (.0.58) and signicant ( p , 0.001). All factor correlations were signicantly below unity ( p , 0.05). These ndings support the convergent and discriminant validity between constructs (Steenkamp and van Trijp, 1991). Equality of factor loadings was also supported: x2 362.90 ( p , 0.001); TLI 0.950; CFI 0.960; [170] and, RMSEA 0.043). The comparison between these two models (non-equality and equality of factor loading models) indicates that the x 2 statistic was not signicant: Dx 2 22.06 ( p . 0.05). Other measures of t also indicate that these two models were [10] not signicantly different in terms of model t: CFI decreased an insubstantial 0.001; and, TLI and RMSEA increased. These ndings provide evidence to support the metric invariance of measures (Mullen, 1995; Steenkamp and Baumgartner, 1998).
Education Without a BA BA and degree postgraduate 164 166 330 140 133 273 Age Young (18-24 years of age) 147 138 285 Older (. 24 years of age) 157 161 318 Income Lowa Higherb Total 164 141 305 140 158 298 304 299 603

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Country Thailand Vietnam Total

Notes: aLess than US$120/month in Vietnam and less than US$500 in Thailand; bfrom US$120/month or more in Vietnam and from US$500/month or more in Thailand

Table I. Sample characteristics

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In sum, cross-national invariance of the measures used in this study was supported. Table II presents factor loadings, composite reliability, and average variances extracted. Tests of hypotheses The multi-group analysis in structural equation modeling (Bollen, 1989) was used to test the hypotheses as well as to compare the structural relationships in the model between the two markets (Thailand and Vietnam). Analysis involved two steps. First, the two samples were used to estimate the paths in the model with no structural paths constrained (model A). Next, constraints were imposed for the structural paths for both markets, i.e. all the structural paths in the model were set to be equal for both markets (model B). The results of the multi-group analysis show that both models (models A and B) received good t to the data (model A: x 2 367.29 ( p , 0.001); TLI 0.946; [164] CFI 0.958; and, RMSEA 0.045. model B: x 2 391.69 ( p , 0.001); TLI 0.943; [171] CFI 0.954; and, RMSEA 0.046). However, Model A (unconstrained model) was selected over model B (constrained model) because it received better t: Dx2 24.40 [7] ( p , 0.001). It is also noted that the correlation between distribution intensity and advertising attitudes was found to be signicant (r 0.28, p , 0.001). Further, no improper solutions were found in any results of the tests (Heywood cases were absent and all standardized residuals were less thanj2.58j). The unstandardized structural coefcients, which are suitable for cross-national research (Singh, 1995), are reported in Table III. Consistent with H1, a positive relationship between perceived quality and brand loyalty was found in both Thailand (b 0.65, p , 0.001) and Vietnam (b 0.94, p , 0.001). H2 proposes a positive relationship between brand awareness and brand loyalty. This hypothesis was supported in Vietnam (b 0.27, p , 0.001) but failed to reach statistical signicance in Thailand (b 0.04, p . 0.52). H3 proposes a positive relationship between brand awareness and perceived quality. This hypothesis was supported both in Thailand (b 0.22, p , 0.01) and in Vietnam (b 0.42, p , 0.001). H4, proposing a positive relationship between advertising attitudes and brand awareness, was also supported both in Thailand (b 0.20, p , 0.005) and in Vietnam (b 0.26, p , 0.001).
Thailand sample Vietnam sample Factor Composite Average variance Factor Composite Average variance Item loading reliability extracted loading reliability extracted 0.78 0.82 0.79 0.71 0.58 0.76 0.68 0.79 0.84 0.87 0.94 0.82 0.70 0.86 0.83 0.86 0.60 0.79 0.80 0.75 0.76 0.66 0.76 0.74 0.77 0.80 0.85 0.82 0.80 0.78 0.81 0.84 0.86 0.60

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Construct Brand awareness

Table II. Factor loadings, composite reliability, and average variance extracted for constructs

Aw1 Aw2 Aw3 Aw4 Perceived Pq1 quality Pq2 Pq3 Pq4 Distribution Di1 intensity Di2 Advertising Ad1 attitudes Ad2 Brand Ly1 loyalty Ly2 Ly3

0.80

0.50

0.82

0.54

0.85 0.87 0.84

0.73 0.78 0.64

0.81 0.80 0.85

0.68 0.66 0.66

H5 proposes a positive relationship between advertising attitudes and perceived quality. Contrary to the nding in H2, this hypothesis was found to be signicant in Thailand (b 0.11, p , 0.05) but not in Vietnam (b 0.01, p . 0.88). H6 proposes that distribution intensity is positively related to brand awareness. Similar to H1 and H3, this relationship was found to be signicant both in Thailand (b 0.34, p , 0.001) and in Vietnam (b 0.25, p , 0.05). Finally, H7 proposes a positive relationship between distribution intensity and perceived quality. Inconsistent with H7, this relationship was found to be neither signicant in Thailand (b 0.11, p . 0.16) nor in Vietnam (b 0.10, p . 0.27). Discussion and implications This study empirically examines key determinants of brand loyalty and contributes to the literature on branding in the developing world by making a comparison between Thai and Vietnamese consumers. The ndings of this study indicate a number of similarities as well as differences exist between Thailand and Vietnam. First, the relationship between perceived quality and brand loyalty, and the relationship between brand awareness and perceived quality are found to be signicant in Thailand as well as in Vietnam. The impacts of advertising attitudes and distribution intensity on brand awareness are also found to be signicant in both markets. These ndings are consistent with previous research on branding in advanced economies: brand awareness and perceived quality are components of brand equity (Aaker, 1991), and advertising and distribution are key determinants of brand awareness (Yoo et al., 2000). Second, the effect of brand awareness on brand loyalty is found to exist only in Vietnam, and the effect of advertising attitudes on perceived quality exists only in Thailand. The results indicate a difference between these two markets. Compared to Thailand, Vietnam is a transitional market, where marketing activities supporting brands are still underdeveloped. In addition, consumers in Vietnam still pay more attention to the country-of-origin than to the brand (The Wall Street Journal, 2004). This may lead to high within-country brand parity, i.e. consumers perceive the differences between the major brand alternatives in a product category, originating from the same country, to be small (Iver and Muncy, 2005). For example, Vietnamese consumers may perceive that all brands manufactured by Japanese companies have the same quality. In this case, a brand that receives high attention from customers, i.e. the brand has distinctive associations that help consumers distinguish it from competing brands, will have a competitive advantage. This nding suggests that managers of international brands design marketing programs that are able to communicate distinctive associations with their brand in order to create high
Thailand sample (n 304) b SE p-value 0.65 0.04 0.22 0.20 0.11 0.34 0.11 0.091 0.063 0.068 0.063 0.055 0.086 0.078 0.000 0.520 0.002 0.001 0.040 0.000 0.165 Vietnam sample (n 299) b SE p-value 0.94 0.27 0.42 0.26 0.01 0.25 0.10 0.105 0.074 0.068 0.073 0.062 0.105 0.089 0.000 0.000 0.000 0.000 0.888 0.019 0.275

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Structural paths H1. H2. H3. H4. H5. H6. H7. Perceived quality ! Brand loyalty Brand awareness ! Brand loyalty Brand awareness ! Perceived quality Advertising attitudes ! Brand awareness Advertising attitudes ! Perceived quality Distribution intensity ! Brand awareness Distribution intensity ! Perceived quality

Table III. Unstandardized structural coefcients (b) with standard errors

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brand awareness. Such programs will assist them in building high consumer perception of the brands value, leading to an increase in brand loyalty. Finally, distribution intensity plays no role in building consumers perception of a brands quality in both countries. The literature on brand positioning indicates that high quality has an inverse relationship with distribution intensity (Frazier and Lassar, 1996). Yoo et al. (2000) found that distribution intensity has a positive effect on brand equity. Therefore, managers of international brands should recognize that distribution intensity may play different roles in different product categories and countries. For that reason, a thorough understanding of the segments that the brand is serving is required. Limitations and directions for future research This study has a number of limitations. First, the survey was undertaken only in the capital cities of Thailand and Vietnam. More representative samples in the two countries are needed in future research. Second, further research should investigate different types of product categories, for example, tangible versus intangible and, low versus high, involvement products. Third, this study investigates female customers. A comparison of attitudes and behavior between male and female customers should be undertaken in future research. Fourth, the focus of this study is international brands. Comparisons between local brands versus international brands, as well as Asian versus Western international brands (Chao et al., 2003), especially about the role of country-of-origin in brand loyalty, are other directions for future research. Finally, several concepts describing the strength of a brand have been introduced in the literature, such as brand relationship quality and brand impressions. Therefore, future research should compare and contrast those constructs to capture a more comprehensive picture of a strong brand.
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