ABSTRACT
The main objective of this study was to examine the effect of brand equity on the marketing performance of selected cosmetics firms in Nigeria. The specific objectives were to; examine the effect of brand association on repeat purchase of selected cosmetics products of selected firms in Nigeria; determine the effect of brand awareness on sales growth of selected cosmetics firms in Nigeria; ascertain the degree of the effect of brand loyalty on repeat purchase of selected cosmetics products of the selected firms in Nigeria; examine the effect of perceived quality on sales growth of selected cosmetics firms in Nigeria; and to determine the effect of brand association on sales growth of selected cosmetics firms in Nigeria. The population of this study was made up of selected marketing and management staff of cosmetics firms in Nigeria as well as their customers. The staff sample was 171 while 196 customers of the selected cosmetics companies’ products were selected using Kothari formula for unknown population. Therefore, the total sample size for the study was 367 respondents. For the study, convenience sampling was used. Findings showed that brand association positively and significantly affects repeat purchase of selected cosmetics firms in Nigeria. This implies that repeat purchase of selected cosmetics firms in Nigeria is greatly dependent on how consumers associate cosmetics brands. Brand association provides consumers with a purchasing reason, so that they form the foundation of repeat purchases and purchase decisions. Also, brand awareness was positive and a significant factor affecting increased sales of selected cosmetics firms in Nigeria. This indicates that sales increase of selected cosmetics firms in Nigeria is greatly dependent on brand awareness. Brand awareness can be said to be the catalyst for the other brand equity dimensions and sales performance of a firm. Similarly, brand loyalty was positive and significant factor affecting repeat purchase of selected cosmetics firms in Nigeria. Brand awareness was significant and positively related to repeat purchase of selected cosmetics firms in Nigeria. This implies that repeat purchase of selected cosmetics firms in Nigeria is greatly dependent on brand loyalty. The study recommended that cosmetics firms need to re-assess the quality of their products and branding strategies used in order to ensure that their brands are reliable and consistent with customer expectations. Often times, it is perceived that the benefits received are far less than what consumers invest in terms of cost to them. It is recommended that cosmetics firms either invest in more branding to justify their pricing or reduce prices of their products and services to match consumer benefits.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of contents vii
List of tables xi
List of figures xiii
Abstract xiv
CHAPTER 1: INTRODUCTION 1
1.1 Background of the Study 1
1.2 Statement of the Problem 4
1.3 Objectives of the study 6
1.4 Research Questions 6
1.5 Research Hypotheses 7
1.6 Significance of the study 8
1.7 Scope of the study 9
1.8 Definition of Terms 9
CHAPTER 2: REVIEW OF RELATED LITERATURE 11
2.1 Conceptual Framework 11
2.1.1 Branding 11
2.1.2 Importance of branding 13
2.1.3 Corporate branding 13
2.1.4. Brand equity 14
2.1.5 Dimensions of brand equity 16
2.1.5.1 Brand awareness 16
2.1.5.2 Brand associations 17
2.1.5.3 Perceived quality 19
2.1.5.4 Brand loyalty 20
2.1.6 Market brand performance 20
2.1.7 Marketing performance 22
2.1.8 Brand equity and marketing performance 25
2.1.9 Perceived quality and marketing performance 26
2.1.10 Brand awareness and marketing performance 28
2.1.11 Brand association and marketing performance 30
2.1.12 Brand associations and market brand performance 32
2.1.13 Brand loyalty and marketing performance 34
2.2. Theoretical Framework 37
2.2.1 Connectionist theories - Chisnall, (1997) 37
2.2.2 Resource-based theory - Barney (1991) 38
2.2.3 Mckinsey 7S model 40
2.2.4 Brand Asset Valuator (BAV) Model 40
2.2.5 Customer Based Brand Equity (CBBE) model – Aaker (1991) 41
2.3 Review of Empirical Literature 42
2.4 Summary of and Gap in the literature. 46
CHAPTER 3: RESEARCH METHODOLOGY
3.1 Research Design 47
3.2 Population of the study 48
3.3 Sample size determination 49
3.4 Sampling technique 50
3.5 Sources of data 51
3.6 Validity of the instrument 51
3.7 Reliability of the instrument 51
3.8 Method of data analysis 52
3.9 Model specification 52
CHAPTER 4: RESULTS AND DISCUSSION 54
4.1 Presentation of data 54
4.1.1 Questionnaire distribution and return 54
4.1.2. Gender of the studied staff respondents 55
4.1.3. Gender of the studied customers respondents 55
4.1.4. Age bracket of the studied respondents 56
4.1.5. Marital status of the studied respondents 56
4.1.6. Educational background of the studied respondents 57
4.1.7. Number of respondent’s years you have been using cosmetics 58
4.1.8. Number of respondent’s years you have been working with the
organization? 58
4.2 Analyses of Data 65
4.2.1 Effect of brand association on repeat purchase of selected cosmetics
products of selected firms in Lagos State, Nigeria 65
4.2.2 Effect of brand association on sales growth of selected cosmetics products
of selected firms in Lagos State, Nigeria 66
4.2.3 Effect of brand awareness on repeat purchase of selected cosmetics firms
in Lagos State, Nigeria 67
4.2.4 Effect of brand awareness on sales growth of selected cosmetics firms
in Lagos State, Nigeria 68
4.2.5 Effect of brand loyalty on repeat purchase of selected cosmetics products
of the selected firms in Lagos State, Nigeria 69
4.2.6 Effect of brand loyalty on sales growth of selected cosmetics products of the
selected firms in Lagos State, Nigeria 70
4.2.7 Effect of perceived quality on repeat purchase of selected cosmetics firms
in Lagos State, Nigeria 71
4.2.8 Effect of perceived quality on sales growth of selected cosmetics firms
in Lagos State, Nigeria 72
4.3 Discussion of Results 73
CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS 77
5.1 Summary of Findings 77
5.2 Conclusion 78
5.3 Recommendations 79
5.4 Limitations of the Study 80
5.5 Suggestion for area of further study 81
5.6 Contribution to body of knowledge 81
References 82
Appendices
LIST OF TABLES
3.1 Population of selected cosmetics firms in Nigeria 48
4.1 Distribution and return of questionnaire 54
4.2. Frequency distribution showing the gender of the studied
Staff Respondents 55
4.3. Frequency distribution showing the gender of the studied
customer respondents 55
4.4. Frequency distribution showing the age bracket of the studied
respondents 56
4.5. Frequency distribution showing the marital status of the studied
respondents 56
4.6. Frequency distribution showing the educational background
of the studied respondents 57
4.7. Frequency distribution showing the number of years the respondents
have been using cosmetics 58
4.8. Frequency distribution showing the number of years the
respondents have been working with the organization? 58
4.9. Frequency distribution showing responses on brand association
for customers of selected cosmetics firms in Nigeria 59
4.10. Frequency distribution showing responses on brand awareness
for customers of selected cosmetics firms in Nigeria 60
4.11. Frequency distribution showing responses on brand loyalty for
customers of selected cosmetics firms in Nigeria 61
4.12. Frequency distribution showing responses on customer perceived
quality of selected cosmetics firms in Nigeria 62 4.13. Frequency distribution showing responses on customer repeat
purchase of selected cosmetics firms in Nigeria 63
4.14. Frequency distribution showing responses on increased sales of
selected cosmetics firms in Nigeria 64
4.15 Simple regression table below presents the effect of brand
association on repeat purchase of selected cosmetics products
of selected firms in Lagos state, Nigeria 65
4.16 Simple regression table below presents the effect of brand
association on sales growth of selected cosmetics products of
selected firms in Lagos state, Nigeria 66
4.17 Simple regression table below presents the effect of brand awareness
on repeat purchase of selected cosmetics firms in Lagos state, Nigeria 67
4.18. Regression analysis showing the effect of brand awareness on sales
growth of selected cosmetics firms in Lagos state, Nigeria 68
4.19 Regression analysis showing the effect of brand loyalty on repeat
purchase of selected cosmetics products of the selected firms
in Lagos state, Nigeria 69
4.20. Regression analysis showing the effect of brand loyalty on
sales growth of selected cosmetics products of the selected
firms in Lagos state, Nigeria 70
4.21. Regression analysis showing the effect of perceived quality
on repeat purchase of selected cosmetics firms in Lagos state, Nigeria 71
4.22. Regression analysis showing the effect of perceived quality on
sales growth of selected cosmetics firms in Lagos state, Nigeria 72
LIST OF FIGURES
1. Conceptual Framework showing the relationship between Brand Equity
and Marketing Performance 37
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Today, brand is seen as one of the most important intangible assets with a very strong influence on market value of companies. Solid and well-known brands are powerful strategic tools and sources of sustainable competitive advantages that should be applied to improve marketing performance as well as to develop durable and trusting relationship with customers (De- Chernatony & McDonald, 2005; Ellwood, 2002; Ind & Bjerke, 2007; De- Chernatony, 2010). Brands have been described as a dimension that is added to a product or service that in turn differentiate it in some way from other products or services. Brands allow us to make emotional connections with products and services. Ultimately, a brand is something that resides in the mind of consumers (Kotler and Keller, 2005).
Over the past two decades, there has been a significant interest in branding (Keller & Lehmann, 2006), with a predominance of branding in consumer markets. However, it is worth mentioning that, in increasingly competitive markets like that of cosmetics industry, branding effect on marketing performance is of great importance as well as worth investigating. Brands play an important role in products differentiation; which in turn can lead to enhanced firm performance (Sharp & Dawes, 2001). This differentiation can be achieved through the creation of various unique brand features; also called the intangible assets (De- Chernatony & McDonald, 2005; Ellwood, 2002; Ind & Bjerke, 2007). Brands have remained firm’s most valuable intangible assets that can generate cash to support their cash flow and ultimate expected profit. In this case, branding of products has emerged as a competitive edge among the competing products and also making the organizations that sell such products to compete favourable. Because of these facts, branding is important in the cosmetics industry since they can influence customer perceptions and make cosmetics brands to be customers’ choice leading to customer loyalty.
Randall (2000) shed light on an important matter which explains that branding lies in creating consumer relations, leading to positive consumer behaviour as well as maintaining the delivery of promised values and experiences. In other words, branding and marketing activities’ main goal is to make the brand both exciting and appealing to consumers. Therefore, with the main basis of marketing and consequent branding operations being consumer-focused and consumer-oriented, consumer behaviour is considered to be the starting point for the majority of branding activities (Blythe, 2013). Taking into account that branding and marketing are consumer-based, it is considered to be that every marketer’s job is to influence consumer actions through all possible touch points. Those influential touch points are based on the fact that each consumer has his/her own set of individual actions, which is the outcome of a distinctive background and experiences that result in a unique consumer behaviour (Blythe 2013).
Thus, a successful brand can be seen as a combination of an effective product, a distinctive identity and added values (Doyle & Stern, 2006). In this sense, the brand and what it represents is the most important asset for many companies and is the basis for competitive advantage and profits. From the above assertions, the importance and benefits of owning a strong and memorable brand is clear. The concept of a brand is now considered one of the most powerful ideas in the business world. According to Ling and Jaw (2011), strong brand names are the ultimate competitive weapon for companies. They are the real capital of all businesses especially for the international businesses which brands are more valuable than plant, machinery and real estate (Kapferer, 2008). Brands represent a foundation upon which international business can build a future (Njuguna, 2009). Implementing a brand strategy is important for market development and competition for the enterprise. When a market develops to a certain stage, a brand strategy will become the core of the business strategy. A brand strategy is of great importance for enterprises to participate in the market competition, to carry through market transforming, to steady and strengthen marketing status, and to compete and win in the international market (Doyle & Stern, 2006).
The desire of firms to improve their performance in the market is the paramount push behind all marketing decisions and programmes. Because the market performance of the firm is cardinal to the corporate wellbeing of business undertakings and also determines the continued existence of the firm in the business landscape. Market performance has thus continued to enjoy very attractive investigations from practitioners and academics. Efforts have been made to determine how individual marketing programmes affect various aspects of market performance. Thus, with a view to determining the core drivers of market performance, several studies have been conducted (Ateke & Iruka, 2015; Adejoke & Adekemi, 2012; Asiegbu, Awa, Akpotu & Ogbonna, 2011). Marketers have realized that it is no longer enough to just provide a value offering to marketplace, and amass tangible assets; but they must also consider their brands as significant intangible assets (Liu, Hu & Grimm, 2010).
Brand equity as a measure of the health of the brand can be used for marketing decision making, because a brand with strong equity is able to control a quality price and keep larger margins, which will generate greater revenues (Faircloth & Capella, 2001). A powerful brand has high brand equity. Brand equity is defined as’’ a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or that firms customers”(Aaker, 1991: 1996).
Brand equity is a power that a brand may have achieved in a market because of its name, sign and logo (Samantaray, 2015). It is the value of a brand based on the extent to which it has high brand loyalty, name awareness, perceived quality and strong brand association. Aaker (1991) and Keller (2008) concur on the contention that brand equity denotes the value endowed to a brand by the consumer.
Prior researches on brand equity and marketing performance do not provide adequate knowledge for managers in the Nigerian context on how brand equity affects a firm’s marketing performance. This is because most of such studies are foreign and conducted using other measures of marketing performance. For instance, Marakarun and Panjakajornak (2017) used customers trust and loyalty. Kilie, Iravo and Omwenas (2016), used service organization, Cetin, Kuscu, Oziam and Erdem (2016) used market share, Park and Bai (2014) used financial performance measures, Huang and Sarigollu (2002) used performance measures as brand sales and market shares. The current study will use non-financial measures and seeks to examine the relationship between brand equity and marketing performance of cosmetics firms in Lagos State, Nigeria. Brand equity as a concept has been extensively researched by the academia and business practitioners (Marakarun & Panjakajornak, 2017; Kilie, et al., 2016; Cetin, et al., 2016; Park & Bai, 2014 ), examining its effect on other marketing performance measures. Though, the concept of brand equity has been extensively researched, little or none has been published on its nexus with marketing performance of cosmetics firms in Lagos State of Nigeria and the existing literature does not adequately answer this important question: To what extent does brand equity influence marketing performance of cosmetics firms in Lagos State of Nigeria?
1.2 STATEMENT OF THE PROBLEM
Companies all over the world whether service or manufacturing firms, recognize the essential role branding plays in the course of business survival and competitiveness. In the present day marketing practice, branding has become an active weapon marketers use to strengthen their marketing performance and thus improve the accomplishment of their stated objectives.
Over the past few years, a steady growth has been recorded in the cosmetics industry in Nigeria, whereby major companies are either into production of their own products or supplementing their production with imports from international partners. This has resulted in increased competition and, in some cases, unfair competition because of the invasion of fake cosmetics brands in the market. This often creates a bad image for genuine cosmetics companies who have high level of rating for their company’s brand. Cosmetics products produced by cosmetics companies in Nigeria are usually distributed using cosmetics wholesalers, licensed cosmetics stores, sales representatives and street vendors as well, this has made its stringent quality control a serious issue. According to Anabila and Awunyo-Vitor (2014), the cosmetics business has not been convincing in utilizing the force of their brands in respect to their partners in the consumer goods markets. This is fundamentally on the grounds that cosmetics items have dependably contended with each other based on functional attributes. It is against this background that branding is increasingly necessary due to the influx of fake cosmetics brands in the system, and that branding goes down to the very core of survival for companies and serve as a competitive advantage in the marketplace. In order to differentiate cosmetics from each other it is expedient to create a corporate image or brand that would make the difference (Tlapana, 2009).
A number of studies have been undertaken to access how brand equity has affected the performance of local companies. A study by Aswani (2010) on the effect of marketing strategies on the performance of insurance companies in Kenya identified branding as an important element in the firm's performance. There is little or no empirical evidence that shows the effect of brand equity on the marketing performance of cosmetics firms in Lagos State of Nigeria hence there is an existing knowledge gap. This study thus seeks to investigate the effect of brand equity on the marketing performance of selected cosmetics firms in Lagos State, Nigeria.
1.3 OBJECTIVES OF THE STUDY
The main objective of this study was to examine the effect of brand equity on the marketing performance of selected cosmetics firms in Lagos State, Nigeria.
The specific objectives were to;
i. examine the effect of brand association on repeat purchase of selected cosmetics firms in Lagos State, Nigeria;
ii. ascertain the effect of brand association on sales growth of selected cosmetics firms in Lagos State, Nigeria;
iii. determine the effect of brand awareness on repeat purchase of selected cosmetics firms in Lagos State, Nigeria
iv. examine the effect of brand awareness on sales growth of selected cosmetics firms in Lagos State, Nigeria;
v. ascertain the effect of brand loyalty on repeat purchase of selected cosmetics firms in Lagos State, Nigeria;
vi. assess the effect of brand loyalty on sales growth of selected cosmetics firms in Lagos State, Nigeria;
vii. examine the effect of perceived quality on repeat purchase of selected cosmetics firms in Lagos State, Nigeria
viii. examine the effect of perceived quality on sales growth of selected cosmetics firms in Lagos State, Nigeria
1.4 RESEARCH QUESTIONS
The following research questions were asked to provide direction for the study:
i. What is the effect of brand association on repeat purchase of selected cosmetics firms in Lagos State, Nigeria?
ii. How does brand association affect sales growth of selected cosmetics firms in Lagos State, Nigeria?
iii. Is there any effect of brand awareness on repeat purchase of selected cosmetics firms in Lagos State, Nigeria
iv. What is the effect of brand awareness on sales growth of selected cosmetics firms in Lagos State, Nigeria?
v. How does brand loyalty affect repeat purchase of selected cosmetics firms in Lagos State, Nigeria?
vi. Is there any effect of brand loyalty on sales growth of selected cosmetics firms in Lagos State, Nigeria?
vii. What is the effect of perceived quality on repeat purchase of selected cosmetics firms in Lagos State, Nigeria?
viii. What is the effect of perceived quality on sales growth of selected cosmetics firms in Lagos State, Nigeria?
1.5 RESEARCH HYPOTHESES
The following null hypotheses were tested in the study
Ho1: There is no significant effect of brand association on repeat purchase of selected cosmetics products of selected firms in Lagos State, Nigeria
Ho2: Brand association does not have any significant effect on sales growth of selected cosmetics firms in Lagos State, Nigeria
Ho3: There is no significant effect of brand awareness on repeat purchase of selected cosmetics firms in Lagos State, Nigeria
Ho4: Brand awareness does not have any significant effect on sales growth of selected cosmetics firms in Lagos State, Nigeria
Ho5: There is no significant effect of brand loyalty on repeat purchase of selected cosmetics firms in Lagos State, Nigeria
Ho6: Brand loyalty does not have any significant effect on sales growth of selected cosmetics firms in Lagos State, Nigeria
Ho7: There is no significant effect of perceived quality on repeat purchase of selected cosmetics firms in Lagos State, Nigeria
Ho6: Perceived quality does not have any significant effect on sales growth of selected cosmetics firms in Lagos State, Nigeria
1.6 SIGNIFICANCE OF THE STUDY
The findings of this study are of value to cosmetics firms as it would expose the power and inherent benefits of good brand. A good branding strategy may also lead to loyal customers and improved relationships with business partners.
This study increases and adds to the limited knowledge and research that exists around branding and marketing performance. The study will be of importance to companies as it would provide them with information to evaluate whether the branding strategies being adopted has an impact on marketing performance. It will also provide insight for entrepreneurs, managers and owners of cosmetics firms, on brand management activities to be followed in order to develop a strong brand and improve on their marketing performance.
The study would impact on business practices of all firms that are operating in a competitive and dynamic environment. It would also be of value to all managers in organizations operating in a volatile business environment all organizations inclusive. It would help manufacturing firms to understand that building brand equity is a major way of maintaining increased sales and stand the heat of competition in the industry
The study will be of importance to academic as the study will provide a good basis for future research on branding strategies and Marketing performance. It will also add to the existing body of knowledge in the marketing field.
1.7 SCOPE OF THE STUDY
This study domiciles on Branding and focused on the effects of brand equity on the marketing performance of selected cosmetics firms in Nigeria. Here, attempts as made to look at concept of brand equity and its significant contribution to sales increase and ultimately marketing performance. The geographical scope of the study was predominantly on selected cosmetics firms in Lagos state, Nigeria. Customers, Marketing Executives/Sales Representatives and some management staff of the selected cosmetics firms formed the unit of analysis in this study.
1.8 DEFINITION OF TERMS
1. Brand Association: Anything which is deep seated in a customer’s mind about a brand. It is the attributes of a brand which come into consumers mind when a brand is talked about.
2. Brand Awareness: The extent to which consumers are familiar with the qualities or image of a particular brand of goods or services. It is also the extent to which customers are able to recall or recognize a brand.
3. Brand Equity: refers to a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent.
4. Brand Loyalty: is the positive feeling towards a brand and dedication to purchase the same product or service repeatedly now and in the future from the same brand, regardless of a competitor’s actions or changes in the environment.
5. Customer Repeat Purchase: is the buying of a product by a consumer of the same brand name previously bought on another occasion. A repeat purchase is often a measure of loyalty to a brand by consumers.
6. Marketing Performance: is marketing results or outputs compared against set objectives
7. Perceived Quality: is the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives.
8. Sales Growth: is the amount by which the average sales volume of a company’s products or services has grown, typically from year to year.
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