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CHAPTER II
THEORETICAL STUDY
2.1 Theoretical Study In this section will be describe some of the concept and theories related to Brand, Brand Equity, Customer Satisfaction and Customer Loyalty.
2.2 Definition of Brand Here are some of the understanding or definition of Brand according to the experts, such as: The definition of brand according to Keller (2003:5), Brand is more than just a product, because it has a dimension which makes the differentiation with other similar product. That differentiation must be rational and look real with the performance of a product in a particular brand or more to be symbolic, emotional and intangible that represent a Brand. According to Philip kotler et.al in the book titled “Brand or Brand Effort Key to Success” (2006:13) states that Brand is a symbol that indicated the Product attributes, benefit, value and culture / personality. Morely Philip Kotler (2006:278) as states by David Aaker that a brand is not always what a company wants it to be, it’s a promise to your customer, the totaly of perception about the product, service or business, the relationship of customer have in it based on their past experience. Brand is a name, term, sign, emblem or design, or the combination of all that is expected to identify the goods or service from a person, the seller or group of sellers and is expected to distinguish the goods or service from the competitor's product as states by Philip Kotler (2006:278). from the definition above, can be take the conclusion that Brand generally define as a name, term, sign, symbol and emblem that are expected to provide the identity and differentiate it from the competitor's product which are the seller
promises to consistently deliver the characteristic, benefits and a certain service to its buyer.
2.2.1 Benefit of Brand in general, as states by (Laksana, 2008) Brand are made by several benefit including:
- as an identity usefull to distinguish a product of a company with the rival's product this will allow consumer to recognize when they shop and re-purchase.
- Promotion tools, useful as a product appeal.
- To foster the image, is to provide assurance, quality assurance as well as prestige to the consumer.
- To control the market. As cited by Jean Noel Kapferer in a book “The New Strategic Brand Management” (2008) from Keller states that Brand has two main roles :
- For the Consumer a. Identification of Source of Product Brand helps consumer in giving information about the origin of certain product, such as the corporation of the original product maker, quality, perception of the product and other things that related to the product. b. Assignment of Responsibility to Product Maker Through brand, the manufacturer has the responsibility to provide consistent performance in meeting the consumer needs. c. Risk Reducer Brand can reduce the risk for customer because of the quality assurance, consumer because there are quality guarantee, no side effect guarantee and brand recognition guarantee from the community as well as product reliability assurance. d. Search Cost Reducer Brand can minimizing cost in a purchase decision process and reduce the cost of search alternative choices. e. Promise, Bond, or Pact With Maker of Product
in general, brand equity is define as a set of asset and the reliability of brand that is associated with a particular brand and the name or symbol that is able to increase or decrease the value provided by a product or service, either for the company provider or for its customers. According to Kotler and Keller (2007:263) in a book “marketing management” states that brand equity is the added value given to product and service. Brand equity can be reflected in how consumer think, feel and act in conjunction with the brand and also the price, market share and profitability given by brand to its company. Belch and Belch (2011 : 62), brand equity is an intangible asset that are the value added from a rosy picture, interest from the difference and the power of customer in the company's name, brand name and other. Peter and Olson (2010 :
- brand equity is strong attitude towards particular brand based on the meaning and belief and can be recalled. Morely as cited in Jean-Noel Kapferer (2008:9) since brand is a name with the power to influence the market, its power increases as more people know it, are convinced by it, and trust it. Morely in summary brand is a shared desirable and exclusive idea embodied in product service, place and or experiences. The more this idea is shared by larger number of people the more power the brand has. Based on the above understanding can be conclude that brand equity is the strength of a brand that promises value expected by the consumer of a certain product that in the end consumer will feel more satisfy compare to the other products.
2.2.3 Element of Brand Equity Aaker and Joachimsthaler in Osman (2009) define brand equity as brand assets linked to a brand’s name and symbol that add to, or substract from, a product or service according to them these asset, shown in figure, can be grouped into four dimension:
Brand Equity
Brand Awareness Brand Association Perceive Quality Brand Loyalty
Figure 2.1 Brand Equity Dimention
Source: Aaker & Joachimstaler, 2000 in Osman, 2009
These dimention have been commonly used and accepted by many researcher (Keller 1993; Motameni & Shahrokhi 1998; Yoo&Donthy 2001; Bendixen, Bukasa , & Abratt 2003; Kim, Kim, & An2003) in Osman (2009)
2.2.3.1 Brand Awareness Organizations can generate brand awareness by, firstly having a broad sales base, and secondly becoming skilled at operating outside the normal media channels (Aaker, 1996). Brand awareness is measured according to the different ways in which consumers remember a brand, which may include brand recognition, brand recall, top of the mind brand and dominant brand (Aaker, 1996). Can be conclude that brand awareness are the capability of potential buyer to recognize again that brand is part from a certain category in Osman (2009).Brand awareness has several sub dimention or indicator such as: a) Brand recognition, this sub dimention consist of brand product that recognize by consumer after being remembered with the help of aided call.It related to consumers’ ability to confirm prior exposure to that brand when given the brand a cue. It requires that consumers can correctly discriminate the brand as having been previously seen or heard. b) Brand recall, this sub dimention consist of brand in a category of a product that being remembered by consumer without unaided recall.Brand recall relates to consumers’ aptitude to retrievethe brand from memory given the product category, the needs fulfilled by the category or a purchase or usage situation as a cue. It requires consumers to correctly generate the brand from memory when given a relevant cue. c) Top of mind, were a brand product which appear the first time in a customer's mind.This is the brand name that first comes to mind when a consumer is presented with the name of a product classification. d) Dominant brand, is the only one brand that remembered by the consumers.The ultimate awareness level is brand name dominance, where in a recall task; most consumers can only provide the name of a single brand. Therefore the challenge
2.2.3.2 Brand Association Aaker (1991) in Osman (2009) believes that brand association and brand equity are strongly interrelated to each other because brand created via the association with attitudes, attributes and benefits respectively. Brand association also acts as aninformation collecting tool (van Osselaer & Janiszewski, 2001) to execute brand differentiation and brand extension (Aaker, 1996). James (2005) also discusses that highly effective association helps to boost brand and equity. In addition, Yoo et al. (2000) and Atilgan et al. (2005) have stated that strong brand association leads to higher brand loyalty as stated by Seferi and Choon Lang (2013). Can be conclude that brand Association are every impression that appears related to the consumer's memory from a certain brand. This element reflect an image of a brand toward a particular impression in its relation with the habit, lifestyle, benefit, atribute, geographic, price, competitor and other. These assosiation aren't only exist but also have the level power. Brand are a set of assosiation that combine in a form that have a meaning. Assosiation and image, both represent every perceeption that can reflecting the objective reality. A brand that well-established will have a position in a competition because it support by strong assosiation.
2.2.3.3 Perceived Quality According to Aaker (1996), one of the main elements of brand equity is perceived quality and perceived quality itself is an essential part of study in evaluating brand equity. According to Aaker (1991, p. 85-86), perceived quality can be defined as the overall perception of customers about brilliance and quality of products or services incomparing with the rivalry offering. Zeithaml (1988) and Erenkol and Duygun (2010) state that quality of product is different from perceived quality because the perceived quality is the buyer’s subjective appraisal of the product. Therefore, perceived quality cannot necessarily be fairly determined because perceived quality in itself is a summary construct (Aaker, 1991, p. 85-86). Zeithaml (1988) asserts that perceived quality can act as a keyinfluencing factor in determining consumer’s choices. According to Motameni and Shahrokhi (1998) and Yoo et al. (2000), perceived quality is positively related to the brand equity. As cited in Seferi and (Choon Lang, 2013).
Perceived Quality has important attributes that can be applied in various ways, such as:
- Actual quality and objective Expansion to a portion of the products or services that provide better service.
- The quality of the product contents Characteristics and quantity of elements, parts, or services supplied.
- Quality manufacturing process Compliance with specifications end result "flawless" (zero defect).
According to David A. Aaker (2004, p.15) perception of quality is the consumer's perception of the overall quality or superiority of a product or service that is equal to the expected mean. Perceived Quality (Perceived Quality of Products) is one of the key dimensions of brand equity (brand equity). Meanwhile Garvin in Durianto , Sugiarto & Sitinjak ( 2004:98 ) mentions that there are seven dimensions of perceived quality of the brand , include : a) Performance : Involves various major operational characteristics. Because of the interest of customers differ from each other , customers often have different attitudes in assessing the performance attributes. b) Services : Reflects the ability to provide services on these products. c) Endurance : Reflecting the economic lives of these products. d) Reliability : Consistency of performance resulting from a purchase of a product to the next purchase. e) Characteristics of the product : The parts of the product which is added to differentiate from competitors' products. f) Compliance with specifications : An overview on the quality of the manufacturing process ( there is no product defect ) according to predetermined specifications and tested. g) Results : Aiming to perceived quality and involves six dimensions previously. If the company can not produce a good product output then chances are the product will not have another important quality attributes.
2.2.3.4 Brand loyalty Are a measurement of how close the relationship of a customer to its brand. This measurement shows a possibility of a consumer may change to other product,
In etymology the word satisfaction came from a latin word 'satis' that means good enough, also fullfill and facio means doing or making. According to Lovelock dan Wirtz (2011:74) satisfaction can be mean as a decision according to the experience. States from Tjiptono dan Chandra (2011:294) satisfaction is a phenomenon summary of an attributes along with the other emotion consumption. Other than that define also as an evaluation buyer where the alternatives that is being chosen are just as same or better than the hope of the customer. Marketing as states by Richard L.Oliver (2010:137) is the performance of activities that seek to acomplish organization’s objectives by anticipating customer or client needs and directing s flow of need satisfying goods and services from producer to customer or client. Can be said that customer satisfaction is the impact from how the activity of marketing and performances in providing product or service, that have a goals to satisfy its customer’s needs. However, Bowen and Chen (2001) Faizan Mohsan (2011)said that having satisfied customers is not enough, there has to be extremely satisfied customers. This is because customer satisfaction must lead to customer loyalty. According to Kotler & Keller (2009:138), “satisfaction is a feeling of happy or dissapointment of people that appears because comparing the working percepting by a product toward their expectation .”Meanwhile in Faizan Mohsan et.al (2011) customer satisfaction holds significant importance in corporate sector because without satisfied and loyal customers, you don't have a business.A single unsatisfied customer can send away more business from your organization than 10 highly satisfied customers. The more you focus on customer satisfaction and retention, the more long-term business you will get. According to Tjiptono (2008:24) “creating satisfaction can give a benefit which are the relationship between company and customer that become harmonic, being a base of repurchase and creating customer loyalty also word of mouth recommendation that benefit the company.” From the definitions above can be concluded that a customer satisfaction is an attitude, measurement, and emotional response from a consumer after the process of buying a product or consumption after comparing the quality that felt with the quality and evaluation expected toward the experience in consumption of a product or service.
2.3.2 Service Quality Parasuraman et al (1988) in Yuen and Chan (2010) defined service quality as the degree of discrepancy between customers’ normative expectations for the service and their perceptions of the service performance’. In order to measure this discrepancy, they devised the SERVQUAL. This is regarded as the most comprehensive and frequently used tool for measuring service quality.15 The service items they proposed are divided into five dimensions: tangibles, reliability, responsiveness, empathy and assurance. The perception-only measure of service quality (SERVPERF), which consists solely of the performance (perceptions) items of SERVQUAL, was later introduced by Cronin and Taylor in 1992 in Yuen and Chan (2010). SERVPERF is adopted in this study, as previous findings have indicated that it outperformed SERVQUAL and is more applicable for measuring service quality. When people are asked to indicate their ‘desired level’ (expectations) and ‘existing level’ (perceptions) of the service, there is a psychological constraint in that they tend to rate the former higher than the latter. In addition, it was found that service quality, as measured in SERVQUAL, significantly depends more on the perception score than on the expectation score. Respondents sometimes even appeared to be irked and mixed-up in distinguishing expectation and perception version of SERVQUAL, which might have affected the quality of the data adversely. The generalizability of SERVQUAL across various service settings is unclear and has not been empirically tested in the retail store environment. Therefore, in order to capture dimensions that are important to retail customers, Dabholkar et al. 1996 in Yuen and Chan (2010). combined findings from three qualitative studies – retail and service quality literatures and SERVQUAL – and developed a scale called the Retail Service Quality Scale. The Retail Service Quality Scale has been viewed as a generalized scale that is suitable for studying the retail business that offers a mix of services and goods. A previous study also used this scale to measure the service quality of a large chain retail store in Australia. Therefore, this scale is adopted in this study. Dabholkar etal. (1996) in Yuen and Chan (2010). argued that these items can be grouped into five dimensions, namely:
- Personal Interaction: Associates are courteous, helpful, and inspire confidence and trust from the customer.
- Policy: Operating hours, payment options, store charge cards, parking and so forth.
- Physical Aspects: Store appearance and convenience of store layout.
- Reliability: Retailer keeps its promises and ‘does things right’.
- Problem Solving: Associates are trained to handle potential problems, such as customer complaints, returns and exchanges. According to Dabholkar et al, 1996 in (Yuen and Chan, 2010). the Physical Aspects dimension has a wider meaning than does the tangibles dimension of the SERVQUAL. This dimension includes not only the physical facilities appearance, but also the store layout and public areas (for example, fitting rooms) convenience. Yuen and Chan (2010) states the Reliability dimension is similar to the SERVQUAL reliability dimension, and involves the store's ability to keep promises and do things right. The Personal Interaction dimension is a combination of the SERVQUAL dimensions of responsiveness, assurance and some items from empathy. It measures customer perceptions of whether or not the store has courteous and helpful employees who inspire confidence and trust. Morely problem Solving in (Yuen and Chan,2010) is a new dimension that measures the store's ability to handle potential problems like returns, exchange and complaints. Although this dimension involved interaction between customers and employees, it is viewed as separate from the Personal Interaction dimension because ‘service recovery is being recognized as a critical part of good service’. The last dimension, Policy, is also a new dimension introduced by the researchers, and represents ‘aspects of service quality that are directly influenced by store policy’.
2.3.3 Elements Customer Satisfaction Tjiptono (2007 : 354) states there are five elements of customer satisfaction, which are:
- Product and service quality Company that wants to apply a customer satisfaction program must have a good quality of product and service. Usually companies that have a high customer satisfaction level also provide high level of service.
- Loyalty Promotion program
customers who purchases from those firms over an extended time period. Today’s highly competitive and dynamic corporate environment compels the financial institutions to have satisfied customers and retain them in order to survive and compete with other market players successfully. Building customer loyalty is not a choice any longer with businesses. It is in fact the only way of building sustainable competitive advantage. Building loyalty with key customers has become a core marketing objective shared by key players in all industries catering to business customers. Yuen and Chan (2010) states Loyalty is an attitude; it refers to positive feelings towards a brand in addition to repurchasing time after time. It includes both attitudinal and behavioural practices, such as repeat buying of a product and service, repurchasing a brand for a long period of time, non-sensitivity to price increases, a relational construct where repeat behaviour and psychological bond are closely connected, a higher possibility of introducing or recommending companies to others and establishing positive public word-of-mouth. Morely in Yuen and Chan (2010) With reference to the above definition, customer loyalty has been generally described as occurring when customers repeatedly purchase goods or services over time and hold favourable attitudes towards, and support, the company supplying the goods or services. Ali Hasan (2008: 81) define consumer loyalty as a consumer tendency to buy a particular brand in high consistency and have a commitment and positive impact toward the company in a way to recommend to other people to buy. Customer loyalty is one of the goals in a modern marketing. This is because with loyalty there is expected that company will get a long term benefit from their mutualism relationship in a particular time. From above definitions then the author summarize that customer loyalty is an attitude that being a pusher behavior to purchase a product or service from a company along with the emotional aspect in it, especially who buys in repeat in high consistency, and not only buy repeatedly a product or service, but also have a commitment and a positive attitude toward the company that offers the product or service itself.Since scholars consent to the relationship between salesperson loyalty and firm loyalty and it is believed that the former will carry the latter, building up salesperson loyalty is proposed as it posts a great impact on the firm loyalty, which firm's customers are prided on getting the products of it over other stores.
size of the business, the industry sector it operates within and the financial motivations of those required to define the term.
- Competitor retention: Is the activity a company under takes to prevent customers from defecting to alternatives companies. Successful customer retention starts with the first contact and continues throughout the entire life time of the relationship.
2.5 Research Before Anindhyta Budiarti et al (2013) doing a research of a brand equity, customer satisfaction and customer loyalty in PT Garuda Indonesia. The research objective is to know the influence of advertising and service quality toward brand equity, the influence of service quality and brand equity to customer satisfaction and influence of advertising, quality service, brand equity and customer satisfaction toward customer loyalty. The research method that is used is explanatory survey method, so can get a correct information and factual based on the influence of advertising, quality service, brand equity and customer satisfaction to customer loyalty. The data collection technique is by using a questionaire that spread to 350 respondent of Garuda Indonesia passanger. From the data collected, reasercher try to measure the influence of advertising, quality service, brand equity and customer satisfaction to customer loyalty by using the analysis method of SEM-PLS with the help of smart PLS software. From the data analysis can be summarize that first advertisement and service quality will increase brand equity, service quality is very dominant to explain brand equity compared to advertisement. Second service quality and brand equity will increase customer satisfaction, brand equity plays an importamt role to explain consumer’s satisfaction compared to service quality. Third service quality, brand equity, and customer satisfaction will increase consumer’s loyality, Customer satisfaction has strong influence to consumer loyalty compared to brand equity, advertisement, and service quality. Janghyeon Nam et al (2011) doing a research according to brand equity, brand loyalty and consumer satisfaction in hotel industry and restaurant in England. The purpose of this research is to investigate the mediating role of consumer satisfaction on the relationship between consumer-based brand equity and brand loyalty. The data collection technique is by using a questionaire that spread to 378 respondent of a hotel customer and restaurant in English. In the research Janghyeon
Nam et al using a SERVQUAL (Service Quality), by comparing two main factors that are costumer's perception of an actual service they get (Perceived Service) with the service that they wants or expect (Expected Service). If the reality are more than what expected, so the service can be said qualify, but if the reality is less than what expected, the service can be said not qualify. If the reality and expectation are equal to the expectation then the the service are satisfied. The measuring tools in this research are likert scale that divided in 5 range scale, started from strongly disagree up to strongly agree. In the research brand equity has five dimention that are physical quality, staff behavior, ideal self congruence,brand identification and lifestyle- congruence. From the data analysis can be summarize that the five dimention ha a positive impact toward the consumer satisfaction and consumer satisfaction partially mediates the effects of staff behaviour, ideal self-congruence and brand identification on brand loyalty. The effects of physical quality and lifestyle-congruence on brand loyalty are fully mediated by consumer satisfaction. From both the research above, if being compared with the research the researcher being doing now, in general have a same objective to know the influence of brand equity to customer loyalty, influence of customer satisfaction to customer loyalty and influence of brand equity and customer satisfaction toward customer loyalty in simultan. What makes it different is the research object that studied by the researcher that is in PT Kurnia Ciptamoda Gemilang in Jl. Raya Kebayoran Lama gang Buntu No 40 south Jakarta.
2.6 Theoretical Framework Brand loyalty is the main target from almost all the businesses in presenting a product or service. Almost all the professional businesses tried as strong as possible to build a brand that has a quality and have more value if compared to its competitor. The brand that build with many advantageous are known as brand equity. According to the description above the author try to make a concept into a schematic picture in below.
Figure 2.2 Theoretical Framework Source: Researcher (2014)
Brand Equity (X)
Customer Satisfaction (Y)
Customer Loyalty (Z)
